Money no object, we’d all love to go out and buy brand new agricultural machinery and equipment.
But for most, that just isn’t a reality. Replacing old or broken machinery is a necessary long-term investment to ensure everything continues to run as smoothly as possible. So, whatever you’re looking for, here are some key things to consider when deciding whether to buy new or used.
As time moves on, so does technology.
This means whatever you buy now will be replaced by a better, faster, more efficient model in the future. However, it’s easy to get carried away when looking at brand new technology and persuade yourself that you absolutely need it. But do you?
If you can avoid temptation, you might find a second-hand machine has all the essentials you need, just without the latest technology.
As well as adding a couple of zeroes to the price, new technology can be very complicated. The electronics are generally interlinked with other areas of the machine, which means that if one thing goes wrong, the whole thing can stop working. In this sense, an older, second-hand model might be easier to maintain.
Tried and Tested
Buying new, modern farming machinery is a good option. It’s never been used and, if you can afford it, it offers all the latest gizmos to make life easier and the most efficient output. But the more gizmos a piece of machinery has, the more potential problems can occur.
Second-hand machines on the other hand might look a little worse for wear, but they are often in full working order and have been “worn in.”
If you can chat with the seller, you can ask questions about how it has worked in the past, anything to look out for, and what might need replacing soon. You could end up with a great machine, with minimal wear for a quarter of the price of a new one.
In contrast, brand new agricultural machinery may not have proven itself in the fields just yet, but it will probably come with a form of guarantee. If it breaks, needs a new part, or isn’t right for the job, you won’t have to shell out more money to rectify the situation. It may be more expensive up front, but the pros of having a support system from the manufacturer might make it cheaper (and less pain) in the long run.
Support and Guarantees
One of the biggest benefits of buying new from a dealer is the warranty.
Depending on where you buy your second-hand machinery, you may find it has little or no warranty. If there are issues, you won’t have the same level of support as purchasing a new machine.
Some second-hand vendors do offer their own versions of guarantees, so it’s worth checking what exactly this entails. You might find that certain second-hand machines come with solid guarantees because they have been checked and serviced by a mechanic. In these cases, you could get the piece-of-mind of buying new, but at the price of a second-hand machine.
One of the biggest downsides of purchasing new farming machinery is the price tag. The more modern the machine, the bigger your budget has to be.
Of course, this means one of the best things about buying second-hand is that it’s generally cheaper.
But if you need the newest option, you shouldn’t let finance stand in your way. After all, this is a long-term investment, and your agricultural business relies on you having the right equipment. If you are looking to buy new but don’t know if your budget will stretch that far, there are some things to consider before resigning yourself to an old model.
An agricultural loan can be a big help. Loans for farmers are ideal because they can help cover expenses and have long contract terms. They take into account that crops need to grow, be harvested, processed, and sold before money is paid back.
If you don’t want to take out a loan and already own other agricultural machinery, you can refinance or borrow against these machines to secure money for the new machine. Releasing equity in this way is great if you want to buy a brand-new piece of expensive equipment but don’t have the cash.
Arranging agriculture finance by refinancing existing machinery is an area Evangate FS specialise in. If you would like to know how we can help you, please contact us.
If you aren’t sure what to get, don’t want to commit long-term, or don’t have the finances right now, you can look at leasing machinery.
Talking to a bank for money is often at the top of a farmers list. Though there are better options. Finance brokers (including Evangate Financial Services) can arrange very competitive rates on loans for leasing equipment or even hire purchase deals.
These options mean you don’t have to come up with the cash immediately if you are looking are more expensive and newer models. Another great thing about leasing is that often these agreements include maintenance clauses and insurance. This means, so long as you pay for the use of the machine every month, you’re covered if it breaks or needs repairing.
Leasing second-hand equipment and machines is another flexible option. Most leasing companies will allow you to add or subtract equipment as your circumstances change. However, the downside is that never really own the machine. You could opt for hire purchase, which means you pay more each month, but you will own the machine outright. But in the long run, it’s cheaper to buy upfront if you can.
One thing to keep in mind is that leasing agricultural machinery is a business expense like any other, so consider how this will affect your net profit and your tax.
How Much Work Has It Already Done?
A potential negative of buying a used agricultural machine is you often don’t know precisely how much stress the machine has been under in the past.
When you buy a used car, you can check to see how many miles it’s done. But the strain on the engine, the breaks, the gear box and the tires, all depend on how the car has been driven. This is much harder to check.
Second-hand agricultural machinery is usually sold with the number of hours of use, rather than distance. The fewer hours a machine has operated – the better shape it should be in.
But there are variables. A machine could have been rarely used for years but has sat rusting. In this case, it will have a low number of hours of use but might have severe damage. Alternatively, it may have been used regularly, but been well maintained. Unless you know what to check, or the machine’s history, you might get an unpleasant surprise.
Nowadays, almost everything has extra options and customizable features. Buying a brand-new farming machine designed for you specifically is, of course, great and probably expensive!
Consequently, buying a used machine will be cheaper, but you may not be able to find exactly what you’re looking for.
It’s a good idea to shop around when buying used, as “new” machines are always coming on to the second-hand market. With more and more farmers choosing to lease machines for a shorter period, these “used” machines are always coming up for repurchase.
The downside is that you might have to wait a while for your dream machine, and someone else might have their eyes on it too.
Conclusion – Buying Your Machinery/Farm Equipment
Whatever type of agriculture machinery you need, money shouldn’t be the only thing you consider when deciding to buy.
There are so many reasons why buying second-hand is a good option; it’s been tried and tested, often has less complicated technology, can be easier to repair, and the price tag isn’t as steep.
But if you want to buy brand new agricultural machinery, the financing options available today from specialist finance brokers mean you can afford to look around. With the guarantees that come with new purchases, savings through fuel efficiency and equipment which completes tasks quicker, you might end up saving money in the long run if you decide to buy new.
In summary, the Pros and Cons of new agricultural machinery vs. Use machinery are:
- New machinery is more expensive than buying second-hand used machinery
- Used agricultural machinery may not come with a manufacturers guarantee
- New machinery will most likely be more energy/fuel-efficient
- Older used equipment will not have the latest technology, but maybe easier to maintain
- The lifespan of new equipment will be longer, whereas older machinery may have been mistreated
- Used equipment may require more repairs, in contrast, new machinery should not
- There may be tax advantages of buying new equipment which is not available with second-hand machinery
Hassle Free Farm Finance
If you are looking to purchase, or lease, new or used farm machinery, equipment or vehicles, please speak to the finance specialists at Evangate FS. We have been taking the hassle out of arranging finance for farmers for over 10 years.