Many businesses apply for asset finance, using it as a more efficient way to access the best available equipment.
This option makes a lot of sense: paying off your equipment in monthly instalments frees up your cash and creates better stability for your business.
The asset finance option you choose may depend on whether you purchase new or used equipment. Take a look at the arguments for each.
Why buy used equipment?
When you choose asset finance to fund the purchase of used equipment, your loan will be secured by the value of the equipment.
In some cases, it may make sense to buy equipment second-hand. This can work if:
- You have a limited borrowing budget
- Your business can save money without sacrificing quality
- The costs to maintain your used equipment are low
- The equipment is still covered by warranty
- Technicians are available for servicing
- Spare parts are easy to source
- The equipment is in good working condition
The decision to buy new or used machinery for your business can also be influenced if you expect to upgrade or replace your equipment in the near future.
Why buy new equipment?
Brand new equipment comes with a higher price tag but is worth the expense in many circumstances.
Your business should consider buying new equipment if:
- You can afford to make the repayments without creating hardship
- Older equipment is difficult to find parts for or have serviced
- The new equipment will deliver strong return on investment
- The equipment will suit a range of requirements
- An extended warranty is available
- You know the product will be reliable and long-lasting
New or used equipment: Do your research
Before you decide to purchase new or used equipment, take a look at product reviews and speak to the vendor to discuss the pros and cons.
As the saying goes; you get what you pay for, so always choose quality over price. When factoring in expenses, consider how much it will cost to operate and insure your equipment. Take depreciation into account as well: older, used equipment may have already lost most of its value.
Think about how long you will use the equipment for and shop around for quotes for the cost of maintenance.
Seek out warranties and guarantees, and ensure someone will be on call to help with your equipment, so a breakdown does not impact your profits.