Demand for secondhand equipment soaring as businesses tackle COVID

Enquiries for finance for secondhand equipment have increased significantly. Businesses are looking for clever ways to grow their business in response to COVID market opportunities.

Many enquiries are coming from businesses that have previously utilised finance to purchase new products such as earth moving equipment, trucks and utes, but are now wanting to know what finance options are available for secondhand items.

The main reasons they want to purchase secondhand is that there are lengthy wait times on new items and secondhand items are being viewed as lower risk options for SMBs.

Getting hold of new equipment is proving difficult with some truck dealers closing their books for 2022 and vehicle dealerships advising up to 12 month wait times on new vehicles.   

As a result, good quality, low hour earth moving equipment, trucks and secondhand vehicles are continuing to sell well. This is pushing up the prices of secondhand vehicles.

In some cases secondary equipment is selling for more than the cost of new equipment.

Slattery Auctions reported last year that late-model prime movers were sought after in second-hand and auction markets. A 2015 Volvo FH13 Prime Mover showing 1,067,315 kilometres on the clock sold for $98,200, representing around 105% of retail.

Late-model European trucks with automatic transmissions were also popular last year with a 2018 Volvo FH540 6×4 Prime Mover selling for $242,733, 95% of retail.

Older trucks also sold unexpectedly well. A 2011 Kenworth K200 Prime Mover showing 474,789 kilometres on the clock sold for $95,000, representing around 95% of retail. 

Based on current supply chain issues, we expect to see the secondary market continue to maintain its momentum. While buying new and used both have their benefits and drawbacks, the issue of finance requires a slightly different set of considerations. 

Tips on financing to purchase secondhand items

Business lending expert

Many firms offer lending products but many cater to consumer lending. Business lending needs in-depth understanding of doing business, challenges and issues facing businesses.

When looking to purchase a secondhand item for a business, speak to a finance provider that specialises in business lending products as they are very different to consumer lending.

Equipment Finance

Equipment Finance has always been a highly popular means of financing the purchase of new and secondhand assets for small to medium size businesses.

In the pandemic there was an increase in the number of enquiries from across a broad range of industries for equipment finance for the purchase of secondhand equipment.

Many businesses are increasingly purchasing items secondhand through private sellers as well and need the flexibility to be able to effect the deal quickly.

The key issue with finance for secondhand items is that the item may have a shorter life span and loans tend to reflect this which is why it is important for businesses to understand all the options available when seeking to purchase secondhand assets with finance.

Invoice Financing

Interest in Invoice Financing has increased in the pandemic as it enables businesses to access funding fast and with relative ease without having to put the family home on the line.

Businesses use their invoices as a form of collateral to generate upfront payment.

Once the facility has been established, the business simply generates and sends invoices as per normal.  As an Invoice Financing provider, we then pay 80% of the value of the invoices to the business upfront so they no longer have to wait for invoices to be paid.

We take care of debtors and manage collections for the business team to focus on work.

For businesses that use Xero or MYOB, we integrate the software to automatically access the invoices directly so it’s a really simple way for busy business owners to access funding. 

Invoice Financing helps businesses to use the facility to purchase new or secondhand assets, stock or meet any other operating expenses the business incurs including wages.

Daniel Riley is the CEO of Earlypay Limited,  Australia’s leading customer-focused business financing organisation. It provides invoice financing, equipment financing and trade financing to Australian small to medium-sized businesses.