Heavy equipment will always fall into the expensive and valuable category for many businesses that need it. As a result, when financing for heavy equipment, businesses will find it to be an uphill battle – especially when they are new or struggling financially.
Even so, understanding the qualifications for getting financed for heavy equipment can help in the decision factor. After all, companies can always consider leasing too. Those qualifications are the following.
Qualification for financing can be determined on 4 major factors. Those factors are:
Based on the qualifications above, some may feel disheartened – especially when they know they have bad credit or are a new business. While the process is difficult, there are various ways for businesses to get approved for financing in Canada. Some considerations for financing or leasing for heavy equipment can be:
Collateral is a requirement with most heavy equipment purchases, especially when large loans are going to be needed. In these instances, the lender will take possession of an asset in order to protect their investment in the event of a default payment. In this manner, the collateral can be used to recover lost costs.
As far as collateral goes, the heavy equipment that’s leased tends to be the collateral. As such, leasing is smarter than seeking financing since leasing won’t ask for down payments or collateral.
There are various factors that determine how long the lease or terms last. These factors are:
If the plan is to use the equipment full-time, a repayment plan for many years could be needed to pay for the equipment in full. Alternatively, loan terms can be upwards of five – or even 10 – years, though they often offer shorter rental terms with renewal options. This can also work in a customer’s favour as small loans will have fewer fees and interest payments.
The interest on heavy equipment will vary due to several factors – such as where people are applying or how financially healthy a company is. Those who have bad credit or struggling financially will find it not only harder but be charged with higher interest rate payments compared to those who are in a better financial situation.
To get the best low-interest rates, and appealing loans/leases terms, it’s important to prove a company is creditworthy. This can be achieved by:
Get started leasing or financing the equipment you need. Contact Yellowhead Equipment Finance today to get started. We’ll help you identify your eligibility, work with you to understand your options, and work with appropriate lenders to get the best solutions for your financing needs.