When the time comes to expand or replace your forestry and logging equipment, the debate usually centers on one question: Should you buy new or used machinery?
In short, your fleet needs to be both productive and profitable. With that in mind, let’s take a look at the different advantages of both options so you can make the right decision for your Canadian logging or forestry business.
We’ll also look at how to choose the best equipment, whichever route you take, and some best practices to get you on the right track with your purchase or lease.
Leasing New Forestry Equipment: Best for Innovation and Predictability
For high-production contracts where every hour of daylight counts, new machinery offers several advantages:
- The Latest Tech: Better fuel efficiency and advanced telematics to track production in real-time.
- Manufacturer Support: Comprehensive warranties that protect you from the financial sting of major mechanical failures.
- Operator Retention: In a competitive labor market, providing your crew with a modern, comfortable, and safe cab is a powerful recruitment tool.
Leasing Used Forestry Equipment: Maximum Value and Immediate Availability
On the other hand, for many contractors, the secondary market is where the best ROI is found. Buying used allows you to:
- Lower your debt load: You can often acquire two reliable used machines for the price of one new unit, allowing you to scale your crew faster.
- Avoid initial depreciation: Just like a truck, heavy equipment loses a significant chunk of value the moment it leaves the dealer lot. With used gear, you don’t suffer the same depreciation at the moment of purchase.
- Immediate deployment: While new orders might have long lead times, the used market often provides work-ready solutions that you can put on the job site by next week.
Choosing the Right New or Used Forestry Equipment: 4 Questions to Ask
Before you lease or purchase forestry equipment, you need to verify that it is in good working condition. Ask the following question, regardless of whether the equipment is new or used:
1. Does the brand have a good reputation?
Research the level of experience, the company’s reputation and their commitment to safety and quality. Some reputable forestry equipment brands include John Deere & Company, Komatsu, Hitachi, Barko, Caterpillar and Rottne.
2. What are the technical specifications of the equipment?
Do an equipment needs assessment to make sure you know what type of equipment you need for your specific project, then verify that the equipment will meet your operational needs in terms of load capacity, speed, dimensions and power.
3. What safety features are included?
Your workers are priceless. Verify that the equipment has working brakes, fire protection, emergency stops and other specific safety features. This is especially important for used machinery. For new machinery, make sure you know what the warranty covers in case of breakdowns.
4. Does the equipment work properly and/or show signs of damage?
New equipment should be in impeccable condition. Used equipment may show signs of wear, but you should verify that this wear has not developed to the point that the machinery is weak or damaged. Tires, brakes, blades and chains should be double-checked for functionality.
The best way to find out if the equipment is ready for safe use is to try it out or have it inspected by a third party. Be sure to observe all safety precautions when testing equipment of unknown status.
How to Inspect New and Used Forestry Equipment Before Signing a Lease: 3 Methods
Whether you have chosen new or used forestry equipment, it is always a good practice to inspect the machinery before payment. You’ll want to check out compliance (safety and regulatory standards must be met), technical specs and structural integrity.
Here is how:
1. On-Site Inspection
Visit the vendor or manufacturer to see the machinery in person, which provides an opportunity to evaluate its build quality and structural integrity.
2. Request a Demo
Most manufacturers and dealers have demonstration facilities where you can see the equipment in operation. Ask to run the machine, or have your operators test it, to check the responsiveness of controls and ensure it can handle your typical workloads. This allows you to witness its performance firsthand and verify that it operates as advertised.
3. Third-Party Inspection
For heavy or complex machinery, you can hire a professional, independent inspector to conduct a detailed, unbiased evaluation.
Types of New and Used Forestry Equipment Financing
There are several types of equipment leases for forestry and logging machinery. Government loans and grants, private investors and loans are several possible routes. Lease financing is another highly popular and practical method for financing heavy equipment, and can be used for both new and used options.
How Does Forestry and Logging Equipment Leasing Work?
Leasing logging equipment or other forestry equipment involves paying a monthly fee to a financing company for the use of the vehicle or equipment. It is similar to renting, as the equipment remains the property of the financial institution, however leases are usually less expensive than rentals, and offer other advantages, including:
- Lower monthly payments
- Flexible terms
- Minimal or no down payment
- Tax benefits
- Upgrades
- Possibility of purchasing (depending on the contract)
It’s also possible to sign a seasonal lease, which is a real advantage since forestry operations are not year-round in most of Canada. Seasonal leases allow you to structure your payments in such as way that you pay more when you are using the equipment, and less during the off-season. In some cases, you may also be able to choose between a short-term and long-term lease (/short-term-vs-long-term-lease/ once published), which could allow you to avoid the costs and responsibility of storing your forestry equipment during the off-season or during mud season.
Signing a Lease on New or Used Forestry Equipment: Best Practices
Choosing to sign a lease is a big commitment. Be prepared by taking the following steps:
- Begin by finding out what the minimum credit score is for signing a lease, and verify whether your company qualifies. The higher your credit score, the less of a risk you pose.
- Assess your specific forestry activities and identify which type of equipment will meet your needs, and how long you will need to use it.
- Compare and contrast various offers before making a decision, remembering to ask about down payment requirements and other lease terms such as whether you could purchase the equipment at the end of the lease, or trade it in for an upgrade at some point during the lease term. Lender terms can vary dramatically, and it’s always a good idea to examine each potential agreement carefully.
- Evaluate the total cost of the lease versus total cost of ownership. Is leasing the right approach for you? Remember to calculate operational and maintenance costs in your assessment of what your company can afford. Contact a business accountant if needed, to come up with a realistic strategy for making lease payments.
- Carefully read the fine print on the contract, checking for extra fees or penalties, and verifying what will happen if you make a late payment.
- Check current tax legislation in your region, and investigate whether you could qualify for tax credits or other tax benefits. At Soluco, the sales tax on equipment leases is distributed throughout the duration of the lease, and when transferring equipment ownership, our lenders will handle the tax payment. With this approach, you can preserve your cash flow by spreading the tax payment over the lease term.
Soluco Provides Lease Financing for New and Used Forestry and Logging Equipment
Whether you choose the reliability of new equipment or the cost-effective utility of used machinery, the goal is the same: preserving your liquidity and boosting operations.
At Soluco, we don’t believe your choices should be limited by the age of the machine. We provide fast, flexible equipment financing for new and used forestry equipment. Our team understands the nuances of the secondary market and works with over 25 lenders to find the specific terms that fit your harvest cycle.
We approve lease applications in as little as 48 hours. Contact us now to get started!