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What You Need To Know Before Financing Used Equipment

Dec 16, 2021
Posted by: Stearns Bank
Manufacturing employee working with equipment

Sometimes used is just as good as new.

Financing used equipment is a great way to find a much-needed resource at a decent price. The trick is that it’s not always easy to find available used equipment.

When you do find equipment that can help your business, there are factors you should consider before making a final decision.

Finding The Right Equipment

Auctions can be a good place to find the equipment you’re looking for. Normally, auctions have some variety when it comes to equipment types and brands.

Larger auction houses have multiple locations and offer online bidding so you can buy something that fits your business from your office or home.

Make sure to use filter searching to find out about titles, maintenance records, warranties and how transportation can be arranged for delivery. With auctions, beware that prices can get bid up so you might not get the pricing you originally thought.

Online marketplaces, such as Facebook, also offer a wide variety of equipment that can be used to compare prices, features and brands.

Private-party sales can also be a good way to find used equipment at the right price. When going through a private party, be sure to perform a thorough inspection, conduct pricing research and make sure the seller has a clear title to the equipment being sold.

Make sure the seller is reliable and trustworthy. Ask the seller for references, consult with peers and always meet the seller in person. You also want to make sure the title is free and clear of any liens.

The easiest, and sometimes the best place, to find the right equipment – used or new – is through equipment dealers. Many dealers have trade-ins or previously rented machines available for sale. But, again, selection may be limited.

The main benefits of purchasing from a dealer is that you get to look at the equipment in person, you can negotiate the price and you will have service and support available to you after the sale.

Equipment Financing Terms

Used equipment can come with a big price tag, so financing the equipment might be necessary. Finding the right lender is key because not all financial institutions offer equipment financing.

When a lender considers financing used equipment, they will need information that helps them understand the condition and value of it. Detailed specs, inspection reports, hours used, and maintenance records will help a lender take stock of its value and determine if they are willing to give you a loan.

No matter who you decide to finance your equipment with, Stearns Bank recommends that you take your time doing the research before making a big investment. Be sure to do all the following before committing to a used equipment purchase:

  1. Request an inspection report, ownership history and maintenance records – just like you would do with a used car purchase
  2. Ask if any upgrades or repairs have been made to the equipment
  3. Inspect the equipment and bring someone with you that you trust
  4. Inquire about any warranties that may still apply
  5. Conduct pricing research to make sure you’re getting a good deal
  6. Ask about any shipping charges that may apply
  7. Get a clear title – this is easily the most important thing you can do when purchasing from a private party
  8. Find an equipment financing source that knows your industry and the type of equipment you’re buying

Stearns Bank can assist you with your used equipment purchase. Click below to get in touch with us today.

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