Used Heavy Equipment Buying Guide
Whether you’re starting a business from the ground up or expanding your existing fleet, financing new equipment may not always be feasible. But how do you know that you're getting the best value for your money when purchasing used equipment? Read our Used Heavy Equipment Buying Guide and learn to shop with confidence.
The process of researching used equipment is different than that for new purchases. Our experts at Thompson Tractor know you need the best machines to keep each project running at full speed. We offer certified used equipment that can maximize your profits, as well as make your fleet more efficient and agile.
We understand your goal is to acquire top-quality equipment that is at or below your budget. Partnering with a dealer like Thompson Tractor to invest in used equipment is your first step.
Used Heavy Equipment Buyer's Guide
Buying used equipment involves a step-by-step process that will guide you through each critical inspection. While used machines don’t change much in an operational sense from the production line — and deliver the same features of a new piece, there are warning signs you should look out for when receiving a machine secondhand.
Investing in machinery takes time and effort to conclude what works for your business and how it can elevate your bottom line. If you make hasty decisions and neglect to perform detailed inspections, results may include downtime, exorbitant maintenance costs, and inoperative equipment. With the proper guidance from our technicians, however, you can remain confident in your decision.
Advantages and reasons to buy used equipment include:
- Limited depreciation
- Excellent resale value
- Consistent operations
Buying new heavy machinery results in immediate depreciation, often occurring within the first year of ownership. Within the initial year after purchase, the heavy equipment depreciation can represent a 20 to 40 percent drop from the original retail price. But after the first value loss, it will likely plateau and remain the same.
When it comes to used heavy equipment resale value, you also gain an advantage. Acquiring used machines allows you to receive a machine that has stabilized value by receiving it secondhand. You’re more likely to regain the initial investment when you place it back on the market — if you keep it maintained. Saving service and maintenance receipts will increase the resale price, too.
From one generation of equipment models to the next, manufacturers may implement large and small changes.
Used equipment may have a lower price, but it may not include the competitive advantages of modern fleet management technology, updated safety features, or quality of life improvements such as a more comfortable cab space.
That said, used heavy equipment can hold it's value for years, because the core functionality and operating power are still strong. A used piece of heavy equipment may perform comparably to a new piece of equipment at a fraction of the cost. This isn't to say your business should avoid new tech when you need it, but be mindful of the actual changes that can affect your bottom line.
The types of industries Thompson Tractor supports include:
We work hard to provide solutions for every sector. Our inventory of used heavy equipment includes machines such as:
Whether you’re looking for one machine or an entire fleet of used equipment, our experts are here to guide you through the process. Because heavy equipment is such a massive market, it’s expected to be sized at around $90 billion by 2020, representing a 28 percent growth from 2016's $70 billion.
How to Shop for Used Heavy Equipment
The first thought that may come to mind when searching for used heavy machinery is to check online sites. It may seem like the quick and easy way out, but there's no substitute for working with a trusted dealer who will support you before, during, and after the sale. In accompany with your dealer experience, other factors to consider when shopping for used equipment include fleet requirements, worksite environments, cost, and essential technology.
Here are five steps to follow as you shop for used heavy equipment.
1. Find a Reputable Dealer
Deciding on a dealer when buying used heavy equipment comes down to the company's standards on maintaining each machine and understanding your exact needs. It’s also smart to partner with a company that offers financial programs and warranties to make it easier and less expensive to replace or repair parts. At Thompson Tractor, we ensure regular maintenance of our equipment and deliver quality-made equipment to make it simpler for you to find services and replacement parts.
Caterpillar® has modular components we can recondition or rebuild, too. It’s vital that you find OEM parts for used heavy equipment because they’re engineered to work with your machines, allowing them to operate at full capacity. Choosing OEM used equipment replacement parts also gives you a financial benefit because warranties often cover them, which provides longer-lasting repairs.
2. Determine Fleet and Project Requirements
Taking a broad overview of your fleet, do you have a specific machine in mind? What type of solution will parallel your projects, upsurge efficiency, and fit with the dynamics of your existing equipment? Knowing the exact kind along with the attachments, capabilities, and size of an engine can help you make comparisons. You can then target the brand and model that fits best with your requirements.
Sometimes, bigger can be better when it comes to getting the job done faster, but it can also cost more to operate and maintain. Smaller versions can maneuver around easier and don’t require as much fuel but can be less efficient in certain situations. After you have a solid idea, research the going rate for the brand and model of machine. You might end up with more than one option for your specifications.
Once you analyze the requirements of current and future jobs, you can come up with a maximum bid that also includes transportation costs.
3. Analyze Worksite Conditions
What kind of environments do you operate in? Is the climate cold or warm? Are there seasonal hazards to be aware of? What’s the terrain like? In some cases, you may be searching for an enclosed cab or tracked vs. wheeled machines. Understanding the atmospheres in which your team works can help narrow your used equipment options.
4. Know the Cost of Used Equipment
The upfront cost is what most managers see first before making a purchase. However, you also need to analyze the price to own used engines. The price to own includes factors such as maintenance, insurance, transportation, fuel expenses, etc. Calculate how it fits into your budget and future expectations.
5. Understand What Type of Technology You Need
As mentioned before, equipment tends to hold much of its value. While it may be the case, there are other forms of technology you can add to machines such as telematics devices. Consider your projects and determine what level of tech you need. Are they simple or do they require logistics and telematics?
The latest technology also may not be an option with all used equipment, and in general, availability will be lower than that of new engines. Choose the device that best facilitates your worksite and even consider investing in more popular models to find replacement parts more easily. Buying specialty equipment means you have to search for unique pieces. Excavators, cranes, and dozers are more common and accommodate new and used OEM parts.
Used Heavy Equipment Inspection — What to Look For
To support you through the process of finding the ideal machinery, we created an inspection checklist for used heavy equipment. What may seem like a tedious process will only help you make the best investment for your company. From checking fluids and documents to inspecting signs of wear and the hours used by the previous owner, used equipment inspection can deter you from making a hefty purchase that results in unknown repairs.
The best advice we can give is to always select well-maintained engines. Here are 10 factors to consider to see the difference between a neglected and well-cared for machine.
1. Age of Equipment
Knowing the used equipment's age can help you estimate how long it will last thereafter. It also presents an idea of how much it’s worth. Is it more than a decade old or is it still within its first three years of life? The age also shows how much maintenance you will need to perform and even help illuminate parts that may go bad within the next several years. From here, you can factor in replacement and repair costs when looking at the asking price of the used machine.
2. History of the Machine
The history of the heavy equipment is an umbrella for all the inspections you will want to advise. For example, was it used responsibly? What are the logged hours and miles? If the previous owner responsibly used it, the machine will be in better shape and last longer. But one that’s used recklessly will default quicker and possibly cause more problems down the line. Check out the body for damage like dents and other factors that show how hard it was used as well as aspects like fluids and exhaust.
3. Proper Documentation
While evaluating the physical condition of the engine is crucial, ensuring proper documentation also plays a major role. Are there any liens against the machine? Can the dealer verify reliability? Always ask for used equipment maintenance records and a list of completed major services. From the papers, you can gain info like fluid change intervals, the average frequency of maintenance problems, and occurrences of severe problems.
Also check that the suspension, hydraulic, engine and transmission components were serviced and examine the oil-sampling records. Documentations will give a clear picture between negligence and proper upkeep, which can make or break the deal.
4. Fluid Checks
As you’re walking around the equipment, be sure to check the inside fluid components. Evaluating engine fluids like the transmission, engine oil, coolant, and hydraulic liquids will give insight into how the machine was maintained and its current conditions.
Dirty and low fluids in the gaskets can indicate poor upkeep and below standard maintenance. Be aware of further concerning conditions, such as water in engine oil, which can relate to more critical issues are at hand. Others include cloudy oil, a coolant system with bubble formations, and oil in coolant or vice versa.
Each of these problems can relate to more extreme engine malfunctions, like a blown head gasket, resulting in costly repairs. Additional replacements on top of the asking price can add up to where you may be paying for more than what you bargained.
5. Previous Operating Hours
Used equipment hours isn’t an all or nothing consideration, but paints an idea of which end the machine is on — whether it’s at its last leg or if it can run for years to come. The best way to know if the previous hours are a significant factor is to calculate the cost/benefit. You can see if saving money is worth the extra maintenance and the possibility of the equipment breaking down more often. You can also check the mileage on the odometer to understand how much it has run.
While numbers often equal liable statistics, they may not be all of what they seem. High hours can impact the value of a diesel engine by resulting in decreased performance, which can mean a need for extra maintenance and result in reduced secondhand life.
On the other hand, even with a massive number of hours, if the former owner maintained and cared for equipment, it can still deliver high performance. If the operating hours are close to the engine’s upper limits, it can still be beneficial for less demanding projects.
6. Wear and Tear Warning Signs
Used equipment evidence of wear is an inevitable factor, but the degree of usage can indicate severe damage vs. regular upkeep. While some repairs can add value, others may be a sign of disregard if done right before selling. Examining the body and undercarriage of the machine can help you see what future repairs may look like.
Be aware of warning signs such as:
- Coolant in oil and oil in coolant
- Difficult engine starting
- Foam in fluid reservoirs
- High temperatures in the system
- Loose pins in the undercarriage
- Oil leaks on or under equipment
- Smoking engine
- Structural damage
- Welds on attachment arms
Of course, a used piece of equipment won’t be as pristine as a new engine from the market, but some signs of wear are more major than others and can indicate problems — especially hairline cracks along the steel, rust, decay, dents, repair welds, and damaged parts. Wear and tear can lead to future breakdowns and hazards, leading to downtime. While small impressions may not have any effect on the equipment’s performance, always examine the front, rear, sides, undercarriage, and tires of your prospective machine.
When checking the engine and transmission, does it smoke when starting up? Examine the chassis for wear on the mounts, bearings or spring coils. Does it start and stop as it should? Look at the hydraulics and work tool attachments for welds and signs of dramatic damage. Are the tracks or tires worn out?
7. Accuracy of Machine
Watch out for the accuracy and precision of the technology, attachments, and general operation of the industrial equipment. Once it’s compromised, it can lead to errors that impact the project and your business. Operating inaccurate machinery can put your worker’s safety at risk and place a setback on your jobs.
8. Engine Exhaust
When you power on the engine during the test drive, take notice of different noises and vibrations — feeling, hearing and seeing how the engine functions can tell you various conditions. In particular, the exhaust can indicate the health of the equipment’s internal components. Check for symptoms like black, white, or blue smoke:
- Black Smoke: Black smoke indicates there is an imbalanced mix of air and fuel inside the engine triggered by inadequate filtration.
- White Smoke: White smoke is a result of mixed fluids like coolant and water spreading in the oil from a blown head gasket.
- Blue Smoke: Blue smoke indicates a broken ring or valve seal where it lets in too much oil causing the engine to overheat.
High costs to make any of these repairs may outweigh the value of the machine.
9. Cab Examination
The driver region can also show how the equipment was cared for. See if the sticks, pedals, gears, and dashboard aspects are working and that the seat and steering are both functional. Even having clean upholstery that’s intact can be a sign of proper upkeep. Is the cab comfortable? Are the controls easy to operate? Can you feel any excessive vibration?
10. Drive Before Buying
Sometimes, the best way to see used heavy equipment maintenance is to test drive the machine like you would with a car. Survey its abilities by performing a test load with a pile of rocks or dirt. Feel for different performance indicators of the engine by looking and listening for grinding or clunking sounds and vibrations. Are there glares in the glass that can affect visibility? Are there any visible fluid or oil leaks?
Make sure to test every speed and movement of the equipment with its appropriate attachments. You can even examine the tightness of the controls such as the rod, control handle, rocker arm, knob, springs, bushings, etc.
How to Calculate the Total Price to Own
The total cost of ownership goes beyond the price you read on the price tag. The calculation is as followed:
- TCO = initial cost + cost of operation + cost of maintenance + cost of downtime + cost of production – remaining value
The initial cost is the price tag number and what you pay for the machine. Added to the price is the operation cost, which includes the money spent on fuel and other aspects that keep the engine running. Maintenance is the expenses of regular upkeep that includes cleaning, adjustments, repairs, and replacements.
Downtime is what you can already assume with lost production, but it also includes components such as delayed work from employees and lost customers. Production is time spent on various projects, and the remaining value shows how much the equipment will be worth after several more years of use.
The price to own used heavy equipment plays a major role in making a final acquisition. It’s critical to consider all the factors to recognize what you’re paying for. Looking at the collective list of expenses will help you make equipment comparisons, so you can see what to expect after the sale and how to prepare.
Seeing the big picture allows you to budget and make alterations within your fleet if needed. Knowing how much goes into the total cost of ownership, do you need to cut back on fuel use? Do your projects need a boost in efficiency? Do you need to cut a percentage of downtime? The total price to own gives you an overall perspective on the sale at hand.
Used Heavy Equipment Financing
Used equipment sales is a great alternative when brand new is not feasible — or even practical for your venture. However, the upfront cost may still cause some uncertainties with used machines, especially if you’re starting to lift your business off the ground.
Your best option is to take advantage of equipment financing options or a rent-to-buy program if available. Thompson Tractor is here to support your growth. We know you strive to be productive and profitable, which means you need flexible financing solutions, quick funds, and fewer fees.
We provide solutions that protect your equipment and deliver support that goes above the norm, and we offer various options when purchasing like low-interest rates and refinancing programs.
Shop Thompson Cat Certified Used Equipment
Thompson Tractor is a full-service provider for sales, parts, service, rental, technology, fluids analysis, and power solutions. It can’t get any better than partnering with a dealer that has everything you need. With an advancing inventory to include more safety-enhancing features, we are an industry leader that knows your business and particular needs. Thompson provides exceptional support, knowledge, and services through our trustworthy and experienced team of experts.
From business owners and fleet managers to construction project advisers, we partner with you to supply an incredible value for used machinery. When you have unmatched support during and after the buying process, choosing Thompson becomes second nature for operations in Alabama and northern Florida.
Shop for used equipment on the Thompson Tractor site, make an inquiry about a piece of used equipment, or contact us online for more details about our used equipment and financing programs.