Obtaining financing for used construction equipment can be a daunting experience but it isn’t impossible. Below are some tips that you can use.
You can get lease financing from all kinds of institutions like traditional financial companies to banks and even equipment dealers and manufacturers. Each of these sources of course has its advantages and disadvantages so it is up to you to weigh the pros and cons of each and determine which one will best meet your needs. There are three major sources of lease financing that you can look to for financing used construction equipment.
How To Finance Used Construction Equipment
Independent Leasing Companies
There are many independent leasing companies that can lease to you used construction equipment. These companies can range from a home based business to big corporations so it all depends on the kind of lessor you prefer to deal with. Independent leasing companies often offer better rates than their competition because they have numerous funding sources. You can also easily negotiate the terms of the lease with them because they are more flexible.
Most banks now offer leases on capital equipment as part of their services. Most banks provide financing to many independent leasing companies but now they also offer leasing directly to the public. If you are interested in leasing used construction equipment, you can visit your local bank and see whether they can offer you a lease. Ask for a quote if they do. When you develop a relationship with your bank, you may have access to several other programs that are unavailable to the public. Furthermore, you may also be eligible for special offers, rates or other incentives.
Captive Leasing Companies
Many manufacturers, especially big-ticket item manufacturers, include captive leasing so as to boost sales and make some money while they are at it. It is called captive leasing because these companies exclusively include finance products produced by their corporate parents. They offer special deals on last year equipment models or closeout equipment. If you have a specific brand of used construction equipment in mind, you can check out what deals the manufacturer is offering before you decide to seek out another source of financing.
Quick Reminders For Leasing Used Construction Equipment
There is a myth about financing used construction equipment that states used equipment is faulty. Used equipment is usually tested by the manufacturer before they return it to the market to ensure that it is working properly. In fact, some of the used construction equipment is just equipment that has been returned by other construction companies because they no longer need it, and not because it is faulty like most people would like to believe.
Ensure that you inspect all used equipment that you plan on leasing before you sign the lease agreement. Test it to ensure it is working well. If you are not familiar with how the equipment works, you can ask someone who knows about construction equipment to help you inspect the machines.
If you want to be in a better position to negotiate better lease rates for your used construction equipment, ensure that you have a good credit score, preferably a high Paydex score or a high yielding bank account with the ability to save for five years. This does not mean, however, that you still cannot get a lease agreement with damaged credit. You still can because there are many financing companies out there that have designed special programs to lease to people who have damaged credit.
Obtaining lease financing for used construction equipment can be beneficial for you. Just like there are good lease deals out there, there are also bad ones. Your main aim when shopping for a lease is to find the best lease rather than be caught in a bad one. Remember that once you sign a lease, you have committed your company to several months or even years of payments on the construction equipment that you have chosen to finance. You will still pay for the equipment even if you do not use the equipment, damage the equipment or find that you no longer need it.
Getting out of a bad lease is much more difficult than getting into one so take your time and choose your lessors carefully. Have an attorney go through your lease to ensure everything on it will benefit your business.
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