9 Common Misconceptions About Equipment Financing

Heavy equipment isn’t cheap. If you’re in an industry that uses certain pieces of heavy equipment, you’ve probably figured that out. So, what do you do if you need some new equipment? Luckily, you don’t always have to foot the bill up front. Heavy equipment financing can help you get what you need when you need it. There’s some false information floating around in regard to this type of financing, though. Are you sure your information is correct?

To help you better understand this type of funding, here are nine misconceptions you shouldn’t believe.

1. You Need a Great Credit Score 

Financing a large piece of equipment is no small thing. You’re likely looking at borrowing hundreds of thousands to even millions of dollars. That means all lenders require huge credit scores, right?

While this would like up with what you may have heard, it simply isn’t true. Many financing companies will require at least a good credit score. There are companies that don’t, though.

It is possible to finance heavy equipment when you have a bad credit score. Keep in mind, though, you’ll likely find better interest rates and financing terms if you have good or great credit.

1. You Need a Great Credit Score 

Financing a large piece of equipment is no small thing. You’re likely looking at borrowing hundreds of thousands to even millions of dollars. That means all lenders require huge credit scores, right?

While this would like up with what you may have heard, it simply isn’t true. Many financing companies will require at least a good credit score. There are companies that don’t, though.

It is possible to finance heavy equipment when you have a bad credit score. Keep in mind, though, you’ll likely find better interest rates and financing terms if you have good or great credit.

2. Heavy Equipment is Only for Construction 

If you’ve heard that heavy equipment financing only applies to construction, it’s time to clear things up. There are many industries that use heavy equipment.

Emergency vehicles, airplanes, and dump trucks and many more things all qualify as heavy equipment. That means that heavy equipment financing applies to shipping companies, hospitals, mining companies, airports, waste collection companies, etc.

If your industry requires the use of large equipment, heavy equipment financing might be the right route for you. See if your industry is mentioned in the list of those we serve.

3. Getting a Loan is the Best Option

When you need equipment fast, leasing your heavy equipment is often the best option.

The debate is clear, that getting a lease is more often better than getting a loan, although it all boils down to your company’s financial situation. Leasing allows you to save your operating capital for whatever you may need it for whether that be unforeseen “emergency costs”, expansion, purchasing goods, and so on. Leasing also protects you from technological obsolescence, giving you the peace of mind that when you are in need of those inevitable upgrades, you won’t be stuck trying to sell a depreciated asset therefore protecting your bottom line.

3. Getting a Loan is the Best Option

When you need equipment fast, leasing your heavy equipment is often the best option.

The debate is clear, that getting a lease is more often better than getting a loan, although it all boils down to your company’s financial situation. Leasing allows you to save your operating capital for whatever you may need it for whether that be unforeseen “emergency costs”, expansion, purchasing goods, and so on. Leasing also protects you from technological obsolescence, giving you the peace of mind that when you are in need of those inevitable upgrades, you won’t be stuck trying to sell a depreciated asset therefore protecting your bottom line.

4. You Need a Down Payment

Down payments come with leases, right? Not always! You may not need a down payment to finance your heavy equipment.You will need to make a down payment with bank financing and with some other institutions. If you don’t have money to put toward the equipment right now, you can often find a no money down option.

5. You Need Collateral 

You might have heard that you need something to offer as collateral in order to get a large lease. That simply isn’t the case. While some leases do require that detail, heavy equipment financing does not.

Instead, the equipment you finance can serve as collateral for the lease. It’s that simple. Some financing companies might try to get you to put everything you can into the lease, so knowing all your options is vital to finding the best financing option for your business.

5. You Need Collateral 

You might have heard that you need something to offer as collateral in order to get a large lease. That simply isn’t the case. While some leases do require that detail, heavy equipment financing does not.

Instead, the equipment you finance can serve as collateral for the lease. It’s that simple. Some financing companies might try to get you to put everything you can into the lease, so knowing all your options is vital to finding the best financing option for your business.

6. Financing is Only for New Equipment 

Just because you need equipment doesn’t mean you need the newest and biggest model. You might be perfectly fine with something older or used. You might choose that option for cost benefits, or even equipment features. Heavy equipment financing will still allow you to get what you want. You don’t have to use it for new equipment. This means you can tailor your finance plan to your specific business needs. But, if you do want or need the newest equipment, financing is available for that too.

 

7. Banks Are Better

Banks offer many financing options that are perfect for many people and situations. When it comes to heavy equipment financing, though, you’re better off with a specialized company. Specialized heavy equipment financing companies know your industry. They’ll have worked with people who’ve had similar needs, and they’ll know what people in your industry are interested in. That doesn’t mean you won’t be treated as an individual, though. The company will have the familiarity you want, but they’ll still be flexible according to your specific situation.

8. Taxes Aren’t Included

You may have heard that you have to cover tax, title, and license costs. While a bank likely won’t cover those, you won’t have to worry about them with financing. That’s not to say you don’t have to pay them. You do, but they can be financed as part of your lease. That means you can work on paying for the total cost of your equipment throughout the coming months and years instead of depleting your operating capital to cover these costs now.

9. You Have Quarterly Covenants

You may have heard that servicing loans and leases for your heavy equipment through financial institutions comes with quarterly covenants, slowing down your business and creating a headache every few months. This is true. However, with specialized heavy equipment financing companies, like AvTech Capital, you are given the quiet enjoyment on your lease that allows you the ability to go on about your business without having to worry about the lease more than making your payments on time. 

Heavy Equipment Financing: A Great Option

The equipment your company needs might feel out of reach due to financial strain. Thanks to heavy equipment financing, that doesn’t have to be the case. Heavy equipment financing can help you get what you need with terms that fit your situation. So, don’t be fooled by misconceptions that would tell you otherwise.

Are you ready to pursue the financing you need? We can help! Contact us today to start your best financing option today!

Fuel Dispensers Financed in $841,915 Transaction

Machinery Lease Announcing an $841,915 equipment lease for a company that operates gas stations and convenience stores in the southeastern United States. With the funds from this equipment finance transaction, the company will acquire several new fuel dispensers,...

$2,603,461 Equipment Lease for Coal Mining Company

Machinery Financing: AvTech Capital is pleased to announce the closing of an equipment finance transaction for a coal mining company. The company mines metallurgical coal, which is then used by metal manufacturers across the globe to produce steel. Equipment for the...

$621,500 in Financing for Fabrication Company

Industrial Equipment Lease: Announcing a $621,500 equipment lease for a fabrication company that offers engineering, drafting, and fabrication services to companies in the energy industry, specifically oil and gas. With the funds from this equipment finance...

$734,229 Equipment Lease for Restaurant Chain

Restaurant Equipment Financing: Announcing the closing of a $734,229 equipment lease for a returning client. The company, a Hawaiian food restaurant chain, has several locations across the United States and plans to open many more in the coming year. Equipment for the...

$3M Jet Lease for Renewable Energy Company

Aircraft Financing AvTech Capital is pleased to announce a $3,010,000 equipment lease for a global renewable energy company. The company provides clean energy solutions and engineers environmental technologies to power and industrial markets worldwide. Equipment for...

Semi-Trucks Leased to Agriculture Cooperative

Vehicle Financing Announcing the closing of a $184,950 equipment lease for a regional agriculture cooperative in the Midwest. The company supplies agricultural products and services including feed, seed, fertilizer, crop protection chemicals, and farm supplies. The...

$1,337,287 Financing Transaction for Metal Manufacturer

Machinery Lease Announcing an equipment finance transaction for a company that produces and sells speciality metal materials worldwide. These metal materials are used in the manufacturing of aircrafts, jet engines, solar panels, wind turbines, medical devices,...

AvTech Capital Closes $180,625 Lease for Communications Company

Machinery Financing AvTech Capital is pleased to announce a new equipment lease. The client is a contractor that supplies satellite and wireless communication services to the United States government. The company innovates cyber and communications technology to help...

$518,038 in Hospital Equipment for Healthcare Provider

Medical Equipment Financing: Announcing the closing of a $518,038 capital equipment lease for a rehabilitative healthcare provider. The company, based in the southern United States, operates several facilities that offer recovery and rehabilitation services to...

$1,522,181 in Gym Equipment and Furnishings Financed

Gym Equipment Lease: Announcing a $1,522,181 gym equipment lease for a company that operates health and fitness clubs in the southwestern United States. The equipment leased includes gym equipment, furnishings, and fixtures. Through equipment financing with AvTech...