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Positives and negatives of buying new machinery


mcleish17
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I guess it depends on whether you need to finance that chipper or not. I think many on here will say that buying a new chipper on finance probably works out more cost effective over the long term then buying an old one out right. The reason being with a new one you 'should' have less down time and repairs should be covered by warranty for the first few years.

Buying used is a gamble. You could end up with a cracker of a machine which has already depriciated on its RRP and if it it reliable then it would almost certainly be a winner over a new machine which will lose quite a bit of money In the first year or two.

Tricky one.

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Read book byfarmer who went through hungry thirties

 

He replaced all his machinery asap with new despite others saying not worthwhile

 

Hi argument was " if we hit hard times again I can hold out without buying new machinery for 10 years"

 

Allways thought that was very sound argument

 

Great argument if you've got the money or can sort the finance out!:001_rolleyes:

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I guess it depends on whether you need to finance that chipper or not. I think many on here will say that buying a new chipper on finance probably works out more cost effective over the long term then buying an old one out right. The reason being with a new one you 'should' have less down time and repairs should be covered by warranty for the first few years.

Buying used is a gamble. You could end up with a cracker of a machine which has already depriciated on its RRP and if it it reliable then it would almost certainly be a winner over a new machine which will lose quite a bit of money In the first year or two.

Tricky one.

 

Much better put than my side of the story.......but was what I ment!

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Positives

new kit looks good for a business image

more reliable less down time

More efficient and less pollution better on fuel

Gives operators a certain amount of feel good factor.

Tax deductable helps keep big tax bills at bay

Repairs covered by warranty

 

Negatives

expensive to purchase

High depreciation

Attractive to thieves

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as previously said a lot depends on how much you are going to use a machine . Second hand can be all right if you know it's history just like any other machine , has it been regularly serviced / maintained , owner operated v ex hire machine . Some firms get rid of kit when they think its about to conk out , best used buys are from retirement sales . There are also tax implications , currently you can spend quite a lot on machinery with the blessing of tax avoidance but some years ago when capital allowances were low it was more tax effective to spend on repairs / refurbishment to existing machines .New machines can be more reliable than older ones if you keep them in good order . generally finance is easier and cheaper on new machines with really old kit being hard to borrow against . Its like everything new businesses' struggle against established ones that have a regular replacement policy .

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New Machines

 

Dealer Backup

 

Manufacturer's special offers and Discounts

 

Warranty

 

Reliability

 

Enhanced Image

 

Improved Workrate & Reduced Downtime

 

Used Machines

 

Cheaper

 

Unknown Quantity

 

May have to refurbish

 

No warranty

 

Potential increased breakdowns and can cost more in the long run

 

Can find a Bargain

 

 

 

 

 

Machinery HP Finance (see my sig line below:001_tongue:)

 

Improves cashflow and doesn't tie up working capital, funding capital items

 

Fees & Interest paid, can be offset against tax - via P&L account

 

Capital 'write-down' allowances claimed, via Balance Sheet in same way as if you'd bought it

 

Allows you to budget capital expenditure and replacement policy

 

HP Finance not subject to recall or change in terms, like an overdraft can be, by your bank

 

Structured funding for your business

Edited by Johnnyboxer
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