Heavy equipment is a very expensive investment. From the initial purchase to repairs, owning equipment is expensive. It is even more expensive when one of your machines randomly stops working. Luckily, there are ways in which you can receive financing options on heavy equipment!
As a small business or independent contractor, you can apply for heavy equipment financing depending on your credit. If your credit is good, then you will surely be able to receive financing. If your credit is bad, however, it may be a lot more difficult for you to acquire such loans.
At Lyon Auction, we offer many heavy equipment auctions to give you the chance to purchase quality equipment at an affordable price. Below, we give some tips on how you can get heavy equipment financing.
Obtain the proper documentation
To receive financinging in the way of a loan, you will need to show proper documentation of your credit history. This is the same as any loan. However, as a small business, it’s essential that you have all the necessary documents needed to receive financing in a timely manner.
Compensate a bad credit rating
If your credit score is weak, find ways to compensate for it. For example, you can offer a large down payment and slow-depreciating assets as security. This strategy is becoming more and more common for growing businesses that need heavy machinery.
Use previous financing
If you’ve already secured large equipment through financing, you can use your lender as a reference. As long as you have a good payment history, this could help secure your loan.
Remember to also include any other financing from your business, like repair work, commercial vehicles, etc.
Show your cash flow
If your company is doing well, get that information to your lender. For instance, bank account statements showing your net income is twice as much as the payments will give lenders confidence that you can repay the loan.
Always keep in mind that strong cash flow is a great persuasive factor, especially for lenders who expect you to pay through ACH.
Lastly, it’s important that you pay attention to interest rates. Depending on your business credit, you may have to pay higher interest rates on less expensive equipment, and vice versa. Depending on the loan company, heavy equipment interest rates can run anywhere from 8 to 30 percent. Be vigilant and ensure you are getting an appropriate interest rate for what you are purchasing!
Heavy equipment can be an expensive investment, but it doesn’t have to be! Use these tips to receive financing for your next heavy equipment investment!
At Lyon Auction, we are a leading heavy equipment auctions company. Our heavy equipment auctions allow small businesses to purchase quality equipment at an affordable price. Visit our website to learn more about our equipment auctions!