Everything you need to know about insurance basics, like coverage types, limits, cost and more.
Tips to Help You Buy Farm Equipment
Whether you have a large farm or a hobby farm, you know the right tools make all the difference. And when a piece of your equipment is near the end of its life after helping you run your business, getting a quality new or new-to-you replacement at the right price is crucial to your bottom line. That’s why we put together this list — to help you find the right farm equipment and make the most of it.
Should I Buy Used or New Farm Equipment?
For some, new is the only way to go. With new farm equipment, financing is typically easier to secure. Cutting-edge technology and its increased efficiency and productivity can be hard to pass up. And with no prior owners, you know the equipment won’t have any issues — and if it does, it should be covered by a warranty.
But that doesn’t mean used farm equipment should always be your second choice. It’s typically less expensive — so if your current equipment is still in good shape, you won’t break the bank buying used as a backup. And if you’re a good judge of equipment quality, you might be able to find a great deal you wouldn’t get on a newer version.
Use these tips to help you decide which route to take:
Consider your current debt situation. Talk with your financial advisor and any other partners in your farm — they can help you put together a plan for securing financing for the equipment, future trade-in values and the equipment’s value to your operation versus the interest a loan would accumulate.
How much use will the equipment see? If your purchase will need to log thousands of hours over the next few years, you’d be wise to lean towards a new or gently-used piece of equipment. Research the typical lifespan of the equipment you’re looking to buy and weigh its remaining hours against its cost.
Judge used equipment condition carefully. Inspecting a used piece of equipment, and even having a specialized mechanic take a look are great ideas. Any honest seller won’t mind you taking a closer look at what they’re trying to part with — and any seller that bristles against an inspection should be a red flag.
Research tax incentives. Buying new equipment can be beneficial for you when you file your taxes. Talk to your accountant and financial advisor about tax deductions, special government programs and other tax breaks you might be eligible for when you buy new.
Give it a test run. Most farm implement and equipment dealers will allow you to give equipment a test run. And if you go the used route, you’ll want to work with a seller who will let you make sure it’s right for you (and working properly) before you complete the sale.
Think about maintenance. Before you purchase any new equipment, consider the difficulty of repairing it. Many pieces of farm equipment are equipped with technology that only dealerships will be able to fix.
With older used equipment, you might be able to avoid large repair bills if you’re able to make small repairs yourself.
Consider the seller. When you buy from a dealer, you’ll likely get equipment with a warranty. And when you buy from a farmer you know, you can generally trust that they’re not trying to pull a fast one. Be careful when purchasing from someone you’re not familiar with — again, a thorough inspection can be the key to avoiding getting stuck with faulty equipment and a lighter bank account.
Having trouble finding the type of equipment you need? Utilize your contacts in the farming community — word of mouth can be a great way to connect with reputable sellers that your fellow farmers can vouch for.
Know the Market, Do Your Research
With the right amount of preparation and detail, you can make sure you’re getting a good deal on your purchase whether you buy new or used. Use these tips to find the perfect time to enter the market and make a smart buy.
Know when to buy. Due to planting and harvesting cycles, the first and fourth quarters generally bring higher equipment prices. It can be a great time to sell, but not to buy new. Keep a watchful eye on equipment prices from month to month — a used equipment seller might be less motivated to shift their prices with the seasons as they might want to get it off their books as quickly as possible.
Research the equipment extensively. Whether you’re buying new or used, make sure you learn all that you can about the equipment. Research the technical specs of equipment models from year to year. Oftentimes, the changes a manufacturer made in the recent year might not be relevant to how you’ll use the equipment, and you can save some cash by purchasing an older model.
Be careful with out-of-business manufacturers. You might get a great deal, but finding replacement parts and getting repairs could be extremely difficult. And unless you plan on using the equipment until the end of its life, you could be on the hook with a hard-to-sell piece of inventory that takes up space on your land.
If you do decide to purchase equipment made by a defunct manufacturer, make sure you contact and get familiar with a farm repair business that will work on that equipment beforehand.
Knowledge is power. The more you know about what you need and what you’re buying, the happier you’ll be with your final purchase.
If you’ve purchased new equipment, make sure to check in with your American Family Insurance agent to ensure you have all the farm and ranch insurance and farm equipment coverage you need.
Related Topics: Farm Insurance