The Case for Used Equipment in 2022

Chris Fletcher – National Vendor Accounts, Crest Capital - 02/17/22

The Case for Used Equipment in 2022There's no other way to say it: used equipment is hot, and getting hotter. And it's time you considered going used/preowned the next time you buy or finance equipment.

Used equipment, whether it's heavy equipment, production machinery, shelving and fixtures, or similar, has always been a part of the equipment buying equation. But today, more and more companies are embracing used equipment. There are a few reasons for this:

1. Used Equipment Costs Less (and is Section 179 eligible.)

This point needs to be at the top of any "why buy used equipment" list. But it's also the least surprising one. Obviously, you always pay less for used equipment than you do brand new.

That said, what some don't know is that used equipment is also eligible for the Section 179 deduction. As long as the equipment itself qualifies for the deduction (and most tangible business equipment does), Section 179 makes little distinction between new or used ("new to you" is the key point). As always, ask your tax professional about this.

2. At Crest Capital, Used Equipment Can Be Financed at The Same Rate as New

We've been in the equipment financing industry a long time, and we've learned two things: Companies want to finance used equipment, and they'd rather not pay a higher rate to do so.

This is where we set ourselves apart. Most lenders won't touch used equipment for a variety of reasons, and even on the off chance they do, they almost always charge a higher rate.

But Crest Capital happily finances used equipment. And even better, our rates for used equipment are the same as new equipment in almost all cases. Plus, we offer fixed rates, so locking in is a good move (especially now).

Companies are always pleasantly surprised to learn these things, and that's why we are the lender of choice for businesses who buy preowned equipment.

3. Used Equipment is Going Fast

The two downsides to used equipment are its supply (finite) and availability (unpredictable). And as we write this, supply chain issues are very much driving the used equipment market.

In short, used equipment is not on backorder or stuck on a loading dock somewhere. You can buy it and take delivery right away.

Companies everywhere are noticing this, and are buying. For example, in a recent report, industry giant BigIron Auctions reported December 2021 sales 50% higher than the prior December auctions, which included the sale of used agriculture, construction and transportation equipment.

"The used equipment market is hot right now due to the lack of supply from manufacturers" explained BigIron CEO, Mark Stock.*

So if and when you see a used piece become available, and you're thinking "maybe I should buy it", well, your competition might beat you to it. We've heard of people driving all night to be first in line for a choice piece of used equipment that just became available.

Of course, getting yourself fast used equipment financing is advantageous. And you know where to go for that, right?

4. Used Equipment is Better Than Ever

There are no two ways around it – much of the used business equipment we finance is of very high quality. This is especially true with heavy equipment, production machinery, and similar. There are two main reasons for this:

The first reason is in most cases, modern machinery is far superior to what was available years ago. To give an example most of us can relate to, remember when "100k miles" was the typical useful life of a car? But today's cars are barely broken-in at 100k. Almost all types of production machinery have followed suit. A used backhoe (et al.) is still quite mighty.

The second reason we're seeing so much good used equipment is larger companies will often lease equipment and/or machinery for tax reasons (they don't want the equipment as an asset on their books). And at the end of the lease (usually 3-5 years), instead of utilizing the purchase option, they give it back and lease another.

Combined with the longer useful life I just mentioned, this makes used equipment a particularly good value for fast-moving, growing companies.

In the end, used equipment is becoming more and more popular, and the companies that embrace this are giving themselves a key advantage over their competitors. If you haven't yet, it's time to consider used equipment.


the Lease Guy

About the Author
Written by (aka the Lease Guy). Chris is a senior account executive at Crest Capital, where he manages vendor finance programs for manufacturers and dealers of equipment, vehicles, and software. He's also an active Twitterer—check out his page if you follow financial topics and current events in the world of finance.

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