Industrial equipment is big business, and market forecasters predict that this is an industry that is going to keep growing significantly through 2021 and beyond.
You need to learn what to expect from the industry so you can get your hands on the equipment you need.
Construction equipment is potentially pricey, so seeking industrial equipment financing will make a huge difference.
Use the tips below to learn more.
Industrial Equipment Financing: What it Is
First off, what is industrial equipment financing?
It’s a type of lease that you get for any equipment purchases you’re making. You can take out one of these contracts on any sort of hard assets you are interested in either buying or leasing.
With this said, here are the main points you need to know about:
1. Consider Whether You Need to Buy or Lease
First things first, you’ll need to figure out the financing situation that works for you.
It’s important to figure out whether you want to lease or buy your equipment. By touching base with a few financers, you’ll get an idea of the terms of the deals they offer, and this can steer you in the right direction.
Leasing, as opposed to buying equipment is expected to keep growing at a rate of more than 8 percent.
If you’re trying to own the equipment for the long-term, a straight purchase would be best. When you want to use the equipment for a few years, leasing is ideal.
Contemplate the type of project load you’re handling and it’ll give you a better idea.
2. Figure Out What Kind of Equipment You Need
Having an industrial equipment lease is one thing, but you need to get clear on what kind of purchase you’re making.
If you’re exploring options, some construction equipment types include excavators, backhoe loaders, bulldozers, and skid-steer loaders. Understanding these forms of industrial equipment will give you a better understanding of your next project.
3. Understand the Benefits of Getting This Financing
There are several great reasons to touch base with an industrial equipment financer.
First off, you’ll definitely want to seek a lease if you don’t have the cash on hand to make a purchase. Getting a reputable company to approve your application gives you business capital so that you can get your company off the ground.
Investing in equipment financing is also useful if you’re always swapping your equipment out and are in need of short-term options.
From a business standpoint, getting a lease can help your business build credit, which can be useful for years.
4. Determine How Much Funding You Need
So as not to bite off more than you can chew, make sure you have a solid budget upfront. Once you know how much financing you need, you’ll want to cap the amount you seek from financers.
This means first getting your credit rating, so you have an idea about how much money you can get approved for.
5. Set Aside Money For a Down Payment
You’ll also need to set aside money for a down payment.
By taking a chunk out of the lease, your principal will be lower, and you will likely receive better interest rates. This makes the agreement more affordable over the long-term so you don’t default.
6. Search for the Best Financers Around and Check Their Ratings
Give yourself the time to find financers that you feel comfortable with.
Research the bond rating and reputation of the equipment financers near you, and take time to compare and contrast experiences and ratings among competitors.
As you approach financers, figure out how much you can pay on a lease each month and stick to that amount.
Consult with an industrial equipment company that has quality financing, and that also lets you test out anything you’re planning to buy.
7. Think About the Repair and Maintenance of the Equipment
Start thinking about repair warranties while you’re shopping for an equipment lease. Many companies offer warranties that are intended to prolong the life of the equipment through consistent repair and maintenance.
Aside from buying a warranty upfront, you’ll also want to keep an eye out for maintenance issues with all of your equipment. Since you’re financing it, the last thing you’d want is to still owe money on defective machinery.
Handle jobs like checking fluid levels and fluid quality, and hire a professional that you know to be trustworthy for any major repairs that the equipment needs. Finding an all-encompassing contractor can be worthwhile since excavators need different maintenance than bulldozers.
The repair shop should be licensed, and should also handle inspections. This routine schedule gives you consistency with your equipment maintenance.
8. Honor Your Heavy Equipment Construction Lease
It’s your obligation to honor whatever kind of agreement you signed up for. This starts with reading through the contract and creating a few copies that you can consult when necessary.
Stick to your payment due dates and work on paying the lease down in a timely manner. Keep in mind that the interest and late fees will keep compounding the longer you take to address the financial agreement.
Search For the Best Financing Agreement
When you’re looking for a quality industrial equipment financing plan, these are the kinds of matters that you will need to address. There are several different lease agreements that you could seek, so you’ll need to weigh your options and talk to some financing professionals.
We would love to be highest on your priority list when you’re looking for financing. At the AvTech Financial Group, You’re getting access to powerful professionals who still keep a personal touch.
Take some time to contact our specialists to learn more.