The numbers the rep has provided is based on the info I gave, which was $250,000 at 2% For 10 years ====== Good morning Dennis, Thanks for your inquiry. I’m happy to provide some information to assist in your presentation. There are definite pros and cons to each option. The one obvious benefit to purchasing a new machine is the fact that it is brand new and would most likely include some sort of warranty; whereas a unit purchased through a Ritchie Bros. auction is as-is. However, the equipment is all available for inspection in the few days prior to the auction, so you could always have a certified mechanic inspect the machines beforehand for peace of mind. Plus, a warranty may not be the biggest concern since it is obvious that you PW Department takes care of their equipment - your 41 year motor grader is still in operation! The big benefit of purchasing a late-model unit through the action is the overall cost. I went through the auction results from our largest auction in Orlando back in February – I found 3 motor graders between the years of 2010-2012. Here are the details of those units: 2011 Caterpillar 12M VHP Motor Grader, 1769 Hours $195,000 2011 Volvo G940B Motor Grader, 2245 Hours $157,500 2012 Caterpillar 120M2 VHP Motor Grader, 2448 Hours $165,000 Since I don’t have the exact details of the make and model your PW department is looking at, I will use the average price of these units ($172,500) for cost comparison. I also don’t have the specific details of the finance option for the new unit, so I made some assumptions when calculating the figures: Equipment Cost $250,000 Brand New Unit $172,500 Used Late-Model Unit Finance Term 120 Months Brand New Unit 60 Months Used Late-Model Unit Finance Rate 2.00% Brand New Unit 8.95% (OAC) Used Late-Model Unit Monthly Payment $2,300/month Brand New Unit $3,514/month Used Late-Model Unit Total Cost of Ownership (incl. interest) $276,040 Brand New Unit $210,840 Used Late-Model Unit (**Assumes $0 down payment, no lease residual, 1st payment due 30 days after signing**) Of course, the price you would end up paying at the auction could easily be less that the $172,500. You’ll notice the finance rate is higher for a purchase at auction - rates are typically higher for used equipment due to depreciation and usage. However, the payments would be completed in only 5 years (instead of 10). One other thing to keep in mind is the low finance rates you see for new equipment through the dealerships are usually subsidized by the manufacturer and some of the finance costs are hidden in the actual purchase price. So based on the figures above, the residents would be saving approximately $65,000 by purchasing a late-model unit through an auction versus buying a brand new unit through a dealership. Another benefit of purchasing at a Ritchie Bros. auction is that the price you pay is the true market value, with no dealer profit or mark-up built into the purchase price. I hope the information provided will be helpful. Please do not hesitate to contact me with any questions or concerns, or if the voters decide to proceed with the auction option. Thank you, and have a great day.
Posted on: Fri, 07 Nov 2014 20:06:20 +0000
Trending Topics
Recently Viewed Topics
© 2015