A guide on heavy equipment finance
admin June 30, 2021

Heavy equipment or heavy machine finance is the need of all businesses. In fact, the big ones and the small businesses need heavy machines for their production requirements. But due to a lack of knowledge on the financing options in the market and their actual nature, business owners fail to select the right option. Many do not even know how this type of finance works. An insight into it can help you decide how to borrow and what is the best deal.

Start with the meaning and then the varied aspects

Heavy equipment finance is a complete concept, and you should understand it step by step. First, the meaning, and then we can move forward towards the various aspects.

Meaning of heavy equipment finance

Heavy equipment finance is a funding option for businesses to buy heavy machines or transportation vehicles for commercial use. The finance is available based on the same affordability factor applicable in all funding options.

What are heavy equipments?              

Several things are considered as the heavy equipment, and the funding is available for them. However, varied lenders have varied strategies for processing the loan because some owners also use heavy machine finance.

  • Boom lift (on construction sites)
  • Excavator (for digging)
  • Tree spade (To move tress in one piece)
  • Heavy-duty trencher (for digging trenches)
  • Pile drivers (to drive piles into the ground)
  • Tractors (for agricultural use)
  • Dump trucks (for recycling procedures) etc.

The list can be longer than this, but for sure, it was sufficient to make you understand the concept and the types that normally businesses consider buying. According to the industry, the types of equipment can always change, and we cannot forget the new inventions in the field of commercial equipment.

Two types of heavy equipment financing

The equipment financing can be done in two ways, which depends upon the business owner's purpose. There are two types of applicants, one who wants to buy and one who wants to use the machine for a temporary period.

  1. Heavy equipment loan – For the businesses that want to buy a new machine or equipment.
  2. Heavy equipment lease – For the businesses that use the machine for a temporary period.

There are multiple options for heavy equipment quick loan in Ireland. They are quick because they have the feature of the instant approval decision. Similarly, for the lease option, the market has so many deals to offer according to the versatile needs of the business owners.

Both loans and leases have many things, such as interest rates, repayments but few things are different in both. For example, in the case of a loan, you need to give an advance deposit while you give a residual at the end in case of a lease.

What works best in case of new and used equipments

In the case of new equipment, the best and only practical thing is the equipment loan, while new equipment is obviously better. The applicants for both already know the best option for them and what normally suits which condition.

In the case of used equipments, the applicant needs to be very sure about the good condition of the equipment. The lease provider has a scrutiny team, and it can never miss on even the tiniest fault in the functioning of the machine. If you are taking a used machine loan, the need for caution is the same and uncompromised.

Benefits of equipment loans and equipment leasing

Before you finally reach a decision for funding, have a look at both sides of the coin. Read why loans are beneficial and also why a lease is beneficial.

Benefits of equipment loans are –

  • Equipment loans are suitable for new as well as used equipment buying. Both types of applicants can find deals suitable to their needs.
  • The interest rates and repayment plans are flexible because the deals have the obvious feature of customisation, which keeps the deal affordable.
  • The applicant can also change the repayment schedule during the loan tenure if he finds it difficult to follow the current one.
  • The loan bearer can take the payment holiday in case of any huge financial crisis in his business and can continue the repayments normally after that.
  • The options for equipment loans are multiple, which means the borrower has many alternatives, making you rich in choice.

Benefits of equipment lease are –

  • It can be cheaper if you borrow with good financial conditions and the lease is long-term. Many businesses do so to get a beneficial deal.
  • Leasing is a great option if a business needs to use updated equipment with time because, in that case, it is of no use to keep the machine.
  • Equipment leases may have tax benefits. You can deduct the repayments from the tax, which is a big benefit for the business.
  • Leasing is a simpler process for both the new and the used equipments. Unlike loans, you do not need to deposit money in advance, but the residual at the end.
  • Leasing is flexible because you do not need to keep the equipment whole life, return it to the provider and find a new updated piece.

Conclusion

There is a huge possibility for the business owners on the part of equipment financing. It is important to keep the business finances in good health and find a fair deal either in loan or lease. The alternatives are many, and the borrowers have great deals to exploit. FinTech has made things easier, but as this financing option includes the equipment, the inspection is necessary in the case of used ones. Still, most of the concerns are easily solved through online procedures. At least the documentation and the approval decision, and fund disbursement happens online.