Heavy equipment financing enables business owners to finance their business and stay on top of their balance sheet. There are however, a few facts about financing heavy equipment that you should know.
Heavy equipment machinery can become very expensive to obtain. There is a lot of information that can be found on the internet including tips on how to look for a leasing company and how to find the best heavy equipment to suit the specific needs of your company. LeaseQ is proud to give you some of the facts about financing heavy equipment.
Facts About Heavy Equipment Financing
You Can Finance Used Heavy Equipment
American business owners and financial managers are sometimes unaware that they can finance used heavy equipment. There are many options of financing used heavy equipment. The irony of financing used heavy equipment is that it has a considerable value when compared to its original price. Other equipment such as computers begins to depreciate once they are sold. There is a broad range of heavy equipment that qualifies for excellent terms, structures and rates. Some of them include:
- Heavy construction equipment
- Machining assets
- Concrete equipment, etc.
There Are A Variety Of Finance Options
When looking to finance your heavy equipment, it is very important to be aware of the various finance options available. The type of financing option that you choose will depend on your company’s overall credit. The first type of financing is a secured business loan. If you do not have outstanding debt and you have a good balance sheet, then chances are you will be approved for a business loan from your local bank or any other financial institution such as a credit union. One of the benefits of obtaining a loan to purchase your heavy equipment is that once you are done paying back the loan, the equipment belongs to you. Unfortunately, if you need to upgrade your equipment, you will have to use more money.
Leasing is the most preferred type of heavy equipment financing because of the few benefits that it has. The advantages are numerous and they include customizable end of term options, simple upgrades, flexible payment terms, immediate write-downs, balance sheet management, and stable cash flow among other advantages.
You can consider either applying for an operating lease or a capital lease. If your cash flow is not stable enough, you may want to consider applying for an operating lease. An operating lease gives you the option of making monthly lease payments without the intention of owning the equipment at the end of the lease term. Many companies favor this type of lease because it has lower rates and lower monthly payments. This means that a business will be able to save on cash flow and working capital for their daily operations.
The application process for financing heavy equipment should be relatively straight forward. You can do it on your own or work with someone who has enough expertise in the leasing industry, such as a lease advisor. Your advisor will help to maximize the unique leasing benefits that are important to your company. To ensure the process goes smoothly, carry copies of your financial statements, information about your partners or owners of your company and any other relevant information. Your partners will most likely be asked to be fully or partially a co lessee on the lease application.
If you have all the information required, financing is usually approved in a day or two. The rates will vary depending on your credit score, the nature and amount of equipment being financed. Once you have obtained an acceptable offer, you can begin preparing lease documents and execute them. If the approval process takes longer than two weeks, it could mean that the leasing company is unable to provide you with the equipment you need, they are not experienced enough to cater to the needs of your business, among other things. You should, however, do a follow-up before you decide to look for another heavy equipment financing company.
The type of financing option you choose for your heavy equipment should not tie up your cash flow. You should also be wary of leasing companies that offer deals which are too good to be true. Some companies offer extremely low rates but have some hidden costs within the contract.
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