TRADE-IN CONSIDERATION TIPS

Trade-in Consideration

Is now the time to replace your machinery?

The decision to trade equipment can be made for several reasons. Sometimes it’s advantageous to trade when machinery is out of warranty, other times trading may be necessary to keep current with technology or avoid costly breakdowns.

While each of these reasons are justifiable, supply chain disruptions, rising equipment prices and strong demand for used equipment have complicated producers' replacement decisions and trade-in activity in recent months.

“Limited equipment availability has turned trading into a fine balancing act,” says Alex Bauer, an AgDirect territory manager in Nebraska. “Some producers are waiting on orders they placed last year and without a serial number it can be a challenge to line up financing.”

“On the used equipment side, prices are up across all brands and by the time of trade-in, a used machine might have an extra 300 to 500 hours on it,” he adds.

With so many variables at play, equipment trade-ins have become a moving target. Factor in rising interest rates and it’s no surprise why producers who typically follow a 1-to-3-year trade cycle may consider holding onto their machinery for another 12 to 24 months.

“What used to be a three-to-six-month process for lining up a new equipment purchase now can take up to 12 to 18 months making it tough to lock in rates,” says Bauer. “However, we’ve been in a relatively low-rate environment for some time, and even though rates have started to creep back up we are still seeing competitive fixed and variable options.”

Tips

Mapping the market, anticipating time of trade

According to Lucas Scheibe, an AgDirect territory manager in North Dakota, tractors ranging from small loader models to large farmed 4WD track machines are currently in high demand. The used low-hour sprayer market is hot, and combines are starting to tick upward. Scheibe says he has also seen more used tillage equipment moving than in previous years.

“Because of limited availability, it may be tough to find a unit that fits within your budget and hour range,” he says. “You may have to pay more for the equipment, consider purchasing out of state or even look at buying another equipment brand.”

“The over-the-road truck and trailer market is experiencing the same delays as the major ag equipment manufacturers,” Bauer adds. “Anything that’s tech-driven or has more components will be tougher to get your hands on.”

As a result, many producers have turned to the auction and private party sectors–both in-person and online–to find the best equipment bargains.

“Over the last two years we’ve seen a rise in financing volume for all types of sales, but auctions and private party purchases really came into play when producers couldn’t find the equipment they were looking for at their local dealership,” says Bauer. “More and more producers are going online to shop for equipment and compare pricing.”

Regardless of how or where machinery is acquired, Bauer advises producers to use their best judgment when replacing equipment and anticipating time of trade. “In the current environment there are really two options: hold onto your equipment for another season or wait your turn knowing it may be worth more or less by the time of trade-in,” he shares. “No matter what you decide, AgDirect has tools and resources, like our online payment calculator, to help you make the best decision for your operation.”

“If you’re thinking about making a trade, you can check out the latest interest rates on our website and work with our territory managers or inside sales team to find the right financing options that fit your operation’s needs.”

AgDirect agdirect.com 888-525-9805.