Many business owners shy away from buying used equipment despite their economic advantage. The risk is perceived as greater than the benefit. Fortunately, the most common used equipment buying pitfalls can be avoided by adding a little extra effort to the buying process.
Buying used heavy equipment at auctions, online, privately, or through a dealer is a risky endeavour.
Here are five methods to reduce the risk.
You must verify that the seller is the legal owner or is authorised to sell the equipment on behalf of the owner.
You will want to ensure you are dealing with a legitimate and reputable company when purchasing equipment at an auction house, retailer or other company by verifying the following:
When you do business with a company, opt for one with a long history and a large customer base to protect yourself. You can easily find out whether the company is stable and likely to stay in business long-term by reviewing its financial statements issued by publicly traded companies.
Getting unbiased customer reviews is easy with Google and Facebook. The Google Business or Facebook page owner cannot modify or remove Google, and Facebook reviews once published. When pressed for time, read the latest reviews, look for customer complaints, and see whether the business handled the complaints professionally.
Customers often leave testimonials on company websites. The more testimonials, the better. The testimonials of other equipment buyers prove that other buyers are more than happy to recommend the seller. You may also call the company and ask if you might be able to speak with some of their most recent clients if no testimonials are available.
If you are thinking of buying used equipment from a business, search for its Better Business Bureau profile on its website (www.bbb.org in the US and Canada). The Better Business Bureau maintains consumer complaints and contact information for businesses. You can discover if a dealer, auction house or other business is reputable by reading reviews, testimonials and business reports online.
When purchasing used equipment, make sure the seller has a legal right to sell the equipment or is authorised by the owner. Make sure no liens are attached to the equipment and give yourself peace of mind by checking records to be certain that it has not been stolen.
Ensure the equipment you are buying is owned outright by the seller before you buy it from an auction company, dealer or any other company; if they cannot confirm, do your own due diligence. Make sure the seller provides you with the original sales invoice for the equipment if you are buying from a private seller, and ensure the name on the sales invoice matches the seller’s name.
To confirm ownership of an item, use the serial number or PIN (Personal Identification Number)
A second method of determining ownership is checking the serial number or PIN (Product Identification Number) on the item. To find out if the item has been reported stolen, call your local police station and give them the item’s unique number. A local organisation that tracks stolen equipment can perform an equipment check for a fee.
If you plan to finance your equipment purchase, most financing companies will conduct a background check on the equipment, including to see if it has been reported stolen.
A seller cannot legally transfer equipment ownership if the seller still owes the bank or finance company the money borrowed for its purchase. The title certificate will include the name of the financing company or bank if money is owed. Once any outstanding debts have been paid, the equipment will be considered a clear title, allowing ownership to be legally transferred. If equipment is mistakenly purchased with a lien or an unclear title, it may be forfeited to the lending institution.
Check and test used equipment before purchasing it, if possible. A qualified mechanic or experienced operator should be hired to perform a physical and functional inspection if you don’t have much experience with heavy equipment. You can contact the seller to schedule an inspection time and location or inquire about when and where equipment can be inspected at the auction site or dealer.
It is preferable to arrange an inspection at the seller’s business location. Make sure you take time to run the equipment through several basic operations and to examine it thoroughly. While conducting the inspection, take note of any damaged items, those that need immediate replacements, or those that need further examination.
You should buy equipment online from a website offering a wide range of images of the equipment. Make sure you carefully study the pictures of the equipment. Do not be afraid to ask any questions you may have to the seller or ask for images showing the equipment from different angles, for instance, a picture of the undercarriage, engine compartment or hours metre.
You should ensure that you have recourse if the equipment arrives in a condition different from what’s displayed online or if it doesn’t arrive at all if you’re buying online or from a private seller. You should always read the terms of any online transaction before buying, and you should only buy from websites with secure escrow.
Payments made by buyers should be held in escrow until the buyer has received the equipment. Ask for an invoice, receipt, or other documentation that identifies you as the owner with every purchase you make. Whenever possible, avoid paying cash when buying from a private seller. Make sure you leave a paper trail that demonstrates you paid for the item using a certified check.