Doing anything for the first time is risky, whether it be getting a new job or founding your very first startup. Financing heavy equipment for the first time is no different. There are so many questions that need to be answered, such as which equipment financing company can you trust, what are the requirements, and how long is the entire process going to take. These are all valid questions to ask if this is your first exposure to equipment financing.
Before you begin your search to find the right financing for heavy equipment here are a few things should know:
Financing Equipment Can Reduce Costs Upfront
Buying the equipment upfront is not always a great idea. You have to take into consideration the amount of money it takes to purchase your heavy equipment, then look at all the other areas of your business that could have benefited from having that money. If you cannot come to the conclusion that this is the best idea, do not go through with it. Buying equipment upfront will only hurt you in the end. Although there are some negative aspects to financing, like being in debt, in the short-term outlook it is possible to be smarter with how you spend your money.
However, you may not get 100% financing if your credit is not good, so make sure before reaching out to a financing company that you know what your credit situation is. It is a smart idea to work on building or maintaining a good credit score in order to receive the best rates for a loan.
There are Several Financing Options to Choose From
Financing with the right company comes with a lot of great options. For example, you get to choose the payment plan that will best fit you and your company’s needs. Depending on the lender, you may be able to take advantage of flexible payment options as well as certain incentives. This means that you are still able to run your business while taking your time paying back the money you owe.
If you are a smaller company or startup that simply does not have enough funding, then looking into financing is definitely a great option for you. By financing, you are taking one step closer to getting the capital you need when you need it. This can be what differentiates between a successful business from one that inevitably fails.
Not All Financing Companies Have a Good Reputation
The company that you choose for your future heavy equipment financing will likely be the most important thing that you can do for the financial safety of your business. There are some financing companies out there that scam your business in order to benefit from you.
These scams come in all shapes and sizes and are more widespread than you could imagine. There are upfront fees where the lender might disguise fees as application fees or document processing fees. There are also companies that use you by taking advantage of your personal information. This can result in identity theft or even stealing from your bank account. Last but not least, scams can occur via email, such as a free period where you get to try their products before any form of payment.
It Can be Hard to Get Equipment Financing at a Bank
If you have had late credit card payments, defaulted on some loans or just a history of bad credit, it can be extremely hard to get financing. This is especially true if you are looking to finance heavy equipment, which usually comes with a hefty price. The reason why lenders will not offer to help finance your request is that to them you look like a risky lender. They are not okay with lending money to someone who is risky, because what if you do not pay your money back in time?
Therefore, the key is to be prepared in all aspects. You need to do your research ahead of time and always be prepared with not only good credit but a good credit history. This will make your financing process a lot easier overall.
It’s a Good Idea to Have a Good Business Plan Before Seeking Financing
Lastly, you have to have a good business plan before making such an impactful decision of getting financing heavy equipment. Some lenders will look at your business plan as a roadmap to your future success. They need to be able to identify your business model, whether that means knowing your product or service. It is also a great idea to be able to detail your current cash flow and set realistic goals for your business to grow successfully.
Of course, make sure that the equipment you are financing is something that you will be using in your company in the long run. The equipment that you are financing should not be something that will fail to add to your company’s long term success.
For more information about financing heavy equipment, contact Charter Capital today and one of their specialists will reach out to you shortly. Charter Capital has been financing equipment for the last 40 years and is a trusted lender with heavy equipment. Check out how they can help you finance your heavy equipment.