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Should Your Business Buy New or Used Equipment?

December 17, 2021 by equiploansonl

All businesses need equipment. For some, this means little more than a few computers and printers. For other companies, equipment equals heavy machinery, and while it’s often a necessary purchase for the functionality of the business, it’s important to think about the impact it’ll have on the company’s finances.

The good news is that there’s more than one way to buy equipment for your business. For most companies, it comes down to a question of whether to buy new or used equipment. There are advantages and disadvantages to both. We’ll take a look at the pros and cons of each in this blog. 

Buying New 

Most businesses automatically look at buying new equipment. This is partly because they don’t think there’s any other option. So what are the advantages and disadvantages of buying new equipment? Let’s take a look.

Pros

The most obvious advantage is that you’ll know that you’ll be the first to use the equipment. That means that it’ll be in the same condition — and just as shiny — as when it left the factory. Buying new is also the best option if you need a niche piece of equipment quickly. Indeed, if there are no second-hand options available, then you may have no other chance than to buy new.

A new product will also be more likely to have the latest technology and will come with a long warranty that protects your purchase.

Cons

The primary downside to buying new equipment is that it can be extremely expensive. You get the advantages of being the first to use the item, but you’ll be paying for the privilege. Another downside is that as soon as you use the equipment, depreciation will set in. That means that the equipment may have lost a significant amount of its value almost instantaneously. This is not good for companies that hope to get the most from their assets. 

The additional costs of new equipment can also be prohibitive. For instance, there may be taxes, and insurance is likely to be more expensive. 

Buying Used

Given the downsides of buying new, many companies are looking to buy used, especially since there is currently a large inventory of second-hand equipment available for purchase. Let’s take a look at the pros and cons of taking this route.

Pros

The primary reason businesses, especially small to medium businesses, buy used is because it’s the most cost-efficient way to get what they need. Unless you positively need the latest technology, then used equipment can give you what you need, without breaking the bank. You can usually find excellent, highly advanced equipment at a great price.

Cons

The primary downside of buying used equipment is that it doesn’t usually come with the same length of warranty as new equipment. You may also have to replace the equipment earlier than if you’d bought it new. However, this detail is often overridden by the financial incentive of buying used since the cost of the equipment can be around 40% less than buying new.

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Tundra Business Synergy trading as Equipment Loans Online.

Credit Representative Number 496186 is authorised under Australian Credit Licence Number 389328. ABN - 63 007 814 458.

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Equipment Finance for Business
Little Collins Street, Melbourne, VIC, AU
Ph. 1300 361 552

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Disclaimer: This page provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. It does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances. Subject to lenders terms and conditions, fees and charges and eligibility criteria apply.
 

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