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!

6th Industrial Finance Schedule Completed with Alaska Corporation

Industrial Financing: AvTech Capital is pleased to announce a $175,000 multi-industry financing transaction for a large corporation in Alaska. This lease was used for essential yellow iron and vehicle purchases. AvTech Capital has financed 6 lease schedules for this...

$705,000 Card & Chip Manufacturing Equipment Lease Transaction

Card & Chip Manufacturing Financing: AvTech Capital is pleased to announce a $705,000 card and chip manufacturing financing transaction for a publicly traded company in Minnesota. The lease was funded progressively to allow for delivery, installation, and...

$3,000,000 Dairy Farm Financing Transaction

Dairy Farm Financing: AvTech Capital is pleased to announce a $3,000,000 dairy farm financing transaction for a large farm in the greater Washington D.C. area. This lease was used for roofing and production upgrades of the farm. This was AvTech Capital's first...

$600,000 Transportation Financing Transaction

Truck Leasing Transaction:  AvTech Capital is pleased to announce a $600,000 truck leasing transaction for a transportation business in Louisiana. This lease was used for purchasing trucks to add to the company's fleet. AvTech Capital has financed multiple lease...

$250,000 Funded for Greenhouse Nursery Equipment

Greenhouse Financing:  AvTech Capital is pleased to announce a $250,000 greenhouse financing transaction for a large grower in Texas. This lease was used for greenhouse equipment and refrigerated containers. AvTech Capital has financed multiple lease schedules for...

$500,000 Nevada Gas Station/C-Store Financing Transaction

AvTech Capital is pleased to announce a $500,000 financing transaction for a Point of Sale system and Car Wash System. This business operates a Gas Station/C-Store in Southern Nevada. AvTech Capital provides businesses a financing relationship that they can trust.  We...

Leasing Solutions that Protect CapEx Budgets and Cash Reserves

Leasing Solutions That Protect CapEx Budgets And Cash ReservesYour capital expenditure (CapEx) budget does more than play an integral role in how your business performs in market today; an effective asset management strategy can also yield a wealth of mission-critical...

$213,000 Financing Transaction for Texas Oil & Gas Company

AvTech Capital is pleased to announce a $213,000 financing transaction for a Texas oil and gas company. This lease was used for modular buildings used by the company employees for operations. AvTech Capital provides businesses a financing relationship that they can...

3rd Financing Schedule Completed for Texas Energy Company

AvTech Capital is pleased to announce a $110,000 financing transaction for a wind energy maintenance company. This completes the company's 3rd leasing schedule with AvTech Capital.  This business operates in Texas and throughout the midwestern United States providing...

$565,000 Furniture & Buildout for Property Management Company

AvTech Capital is pleased to announce a $565,000 financing transaction for a California real estate management company. This company develops and manages multifamily communities throughout the United States. The money was used for furniture and a buildout of ...