Whether you're just starting your construction company or want to make sure the next backhoe you purchase is as cost-effective as possible, you have a few important considerations to make. Should you buy new or used equipment? Do you want to buy it outright, finance it or rent it? Answering these questions helps you make the best decision possible for your business.
Should you buy a new or used construction backhoe?
Choosing between new and used equipment is one of the biggest decisions that businesses will make when it comes to acquiring equipment and expanding their fleet. There's also not a clearly defined answer that's applicable to all businesses. Instead, you need to consider your company's unique position and the distinct benefits that come along with new and used backhoes.
New equipment's most notable benefit is that it arrives pristine, fresh from the assembly line and ready to work. You'll know exactly how and when it's used from the moment it goes into service, which makes it easier to keep track of potential issues and provide detailed information and use history to technicians. Of course, new equipment is also the more expensive option, and it still needs to have its engine and other major components protected to avoid the possibility of costly repair bills.
Used backhoes, meanwhile, can be significantly less expensive than new equipment while still providing reliable service for many years. When your business chooses Cat® Certified Used Equipment, you know it's gone through a thorough inspection and servicing process to bring it up to the standards Cat has for all of its backhoes and other machinery. This also mitigates the issue that some owners of uncertified used equipment run into when trying to service it, in terms of not knowing what the equipment has experienced in the past.
Should you finance equipment, rent it or purchase it outright?
The choice between buying equipment directly or financing it also has a major impact on your business's finances. If your company has the cash on hand, a purchase can save money in the long run compared to financing. However, it also means giving up valuable working capital for a singular, specific purpose. Many companies simply don't have the luxury of maintaining a strong cash reserve and also purchasing a construction backhoe.
Renting is also a possibility. However, unless you only need a backhoe on a very occasional basis, renting is likely not the best option. It's usually more expensive than purchasing or financing, and isn't nearly as convenient when a backhoe needs to be on the job on a regular basis - sometimes, you simply may not have the choice to rent it.
Financing a backhoe makes it possible to spread the cost of the equipment across a much more manageable timeframe, giving your business more financial flexibility as well as direct access to the machinery your business needs. Financing breaks down into a few specific options:
- Finance lease focuses on providing the option to purchase the backhoe - or any other piece of equipment leased - during specified points during and at the end of the agreement. Terms can last from 12-60 months and your company generally retains the tax benefits associated with ownership. 100% financing is also available to qualified customers.
- Operating lease emphasizes flexibility, providing the option to either purchase or return the equipment. Terms last from 24-60 months and early purchase options can be negotiated.
- Loan allows your enterprise to build equity while also benefiting from immediate ownership. You can use a loan to finance both new and used equipment, and this approach to eventual ownership allows your business to retain the tax benefits of ownership as the loan is paid off. It also offers Cat Financial's lowest total acquisition cost for eventual ownership.
What else do I need to know about getting a construction backhoe for my company?
We've covered the most important parts of the many strategies you can use to acquire a new or used construction backhoe, but you should also keep these two things in mind:
- Protecting your equipment is of utmost importance to avoid financial hardships and get as much out of your backhoe as possible. Our extended protection solutions offer a range of options that allow you to choose what's for your individual needs.
- When it comes time to get a new piece of equipment and get rid of your current backhoe, donating it to charity can offer you a tax break while also helping those in need.
To learn more about financing and loan options for construction backhoes, contact us today.