Timing Your Trade-In to Maximize the Value of Your Investment
24 May 2018
Plenty of farmable land and industry experience go a long way in solidifying the profitability of your farm, but the most successful farmers showcase another key characteristic: strategic equipment ownership. Today’s farmers require a great deal of agricultural machinery designed to assist in day-to-day operations, and while this equipment can prove costly, carefully planning when to trade in used farm equipment can help ease the overall financial burden. The factors that need to be considered before trading in will naturally vary based on each unique machine and situation, but there are several key things to keep in mind during the farm equipment trade-in process.
Your Equipment Won’t Always Receive Manufacturer Support
The exceptional longevity offered by modern, high-quality farm equipment could make it seem logical to wait as long as possible before trading in. But, when you take a longer viewpoint, this may not be the best decision. For one, manufacturers don’t support their products forever. This means that obtaining replacement parts for a given piece of equipment can become a time-consuming hassle further down the road, which could take a major toll on productivity and significantly reduce the value you’ll receive in return for the equipment.
So although your tractor may be performing well a decade into ownership, be aware that you may be better off trading it in earlier on, when it still offers the potential for years of worry-free service. You’ll likely receive a much greater value, which in turn could let you secure a more high-tech piece of equipment that pays for itself over time.
Waiting Too Long Could Lead to Costly Downtime
Machinery malfunctions are another downside to delaying a trade-in. Breakdowns prompt many owners to initiate a trade, and there’s no denying that once problems start to appear, your equipment’s value depreciates greatly.
Furthermore, out-of-commission farm equipment diminishes productivity, resulting not only in a low-value trade-in, but also the cost of the time spent seeking and securing new machinery, which can be especially costly if the downtime overlaps with planting or harvesting seasons. And depending on just how long this search takes and how valuable that lost time is, you may end up in a tougher financial situation than you would have if you had elected to trade in your equipment when it was still working well.
Each year, new models of tractors and other farm equipment are released. The latest machines are able to justify their higher price tags with high-end technologies. Some farmers pride themselves on owning machinery that’s on the forefront of innovation, but before you trade in your current model for the latest model, first consider the return on investment of these technologies. Many new technologies simply make the farming experience more comfortable and convenient, but to truly maximize your trade-in value, look for new technologies that have the ability to increase profits. Does the technology allow you to complete more work in less time? If so, it could be beneficial to consider trading up.
Your Work Needs Will Change
When deciding whether to trade in used farm equipment, you need to consider how your farming needs could change several years from now. If you’ve been seeing consistent growth operationally, you could benefit from trading in your machinery early, while its value is still fairly high, in order to acquire new machinery that can handle an expanded production capacity.
Likewise, if you’re planning to downsize your farm, trading your current equipment for smaller, less-expensive equipment could lead to a notable decrease in overall operational costs.
A one-size-fits-all farm equipment trade-in strategy simply isn’t possible – there are far too many variables, from the amount of land you’re working to the brand of equipment you prefer to the current agricultural economy. Regular trade-ins for newer-technology models may work well for one farm, while long-term ownership may be more viable for another. Regardless, if you’re considering trading in, keep these ideas in mind to make navigating the complex terrain of farm equipment ownership that much easier.Discover more Big Ag equipment articles here.
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