In almost any kind of business, one of the best ways to cut costs is by buying used equipment. Whether it’s filling equipment or warehouse machinery, the cost of used equipment is substantially lower than when it is brand new. Hence, used equipment often provides businesses with more value for their money in the long run—but this is not always the case.
As you would expect, buying used equipment is often a gamble. You don’t know when that piece of equipment will fail, and you can’t be sure how long it will last for your business. So, to make the most out of every piece of used equipment that you buy, here are several tips that you should follow:
Do due diligence
You cannot do away with performing due diligence when buying used equipment. Otherwise, you may end up with a piece of machinery that is not worth its price or, worse—not legally owned by the seller. That said, make it a point to do your homework before purchasing any equipment. Ensure that the seller is the legal owner of the item, check the legitimacy of the item itself, and then double-check the title to make sure that there are no outstanding payments on it.
Failing to do due diligence can cost you a significant amount of time and money, so don’t move forward with a deal until you have verified all of the details involved.
Work on your finances
If you plan to take out a loan to buy used equipment, you would want to be in the best financial position possible. Lenders look at your credit score first and foremost, so this is where you should start. Having a high credit score does not only increase your chances of securing a loan, but it can also help you attain lower interest rates, which can help you save more money in the long run.
Aside from your credit score, lenders will also want to look at what kind of revenue they can expect during the life of the loan. With that in mind, it is best to apply for a loan after you have been in business for a substantial amount of time and if your current cash flow is in good shape.
Find a reputable seller
There are surely a lot of reputable sellers, but there may be just as many unscrupulous ones. It goes without saying that you should work with someone that you can trust, particularly someone that possesses a good track record in their respective industry. Whether you are doing the deal online or in person, you must only work with a seller that is trustworthy and has a good reputation.
The best way to find such a seller is by asking other business owners for referrals. Someone within your industry may be able to point you in the direction of a seller that best fits your needs. Apart from that, you can also comb through sources online, but always be wary of common fraud scams on online marketplaces.
Ignore “too good to be true” deals
The saying “if it’s too good to be true, it probably is” cannot be more accurate when buying used equipment. Not only can some sellers try to advertise their product as more high-quality or better-maintained than it actually is. But they might also put a low price tag on it to attract more buyers. That said, always trust your gut when scouring through deals, especially online. If the price is too good to be true, you are likely better off moving on to something else.
Inspect the equipment thoroughly
A thorough inspection can help you uncover potential issues in the piece of equipment that you’re planning to buy, as well as signs of poor maintenance. At the same time, it can give you a good idea of how much longer the machine will last through regular wear and tear.
So before you purchase a piece of equipment, give it a full inspection. Better yet, hire an experienced technician to inspect the unit and provide their expert opinion on whether you should buy it or not.
Buying used equipment is an excellent way to save money, reduce waste, and help your business scale despite having limited capital. However, used equipment usually comes with some level of risk. For this reason, be sure to heed these tactics before you buy any piece of used equipment—and always trust your gut. Don’t let yourself fall victim and end up with equipment you can’t use.