3 Great Reasons To Finance Construction Equipment
Equipment can be expensive in any industry, but construction equipment is unique in its level of specialization due to the heavy lifting involved with most projects. From your basic everyday power tools to specialized project-specific vehicles, financing can help you get everything you need while delivering milestone achievements on time and on budget. Here are three reasons why it can do that.
1. Financing Equipment Reduces Upfront Costs
Loan and financing arrangements allow you to invest in machines with life expectancies far beyond the loan term because you only need a portion of the cost upfront. The rest of your construction equipment’s purchase price is reduced to installments. When you need a lot of pieces at once, it can be the secret to getting them all.
2. You Reach a Return on Upfront Costs Faster
When you need to make the entire cost of your equipment back before seeing any profit from the investment, it tends to be a long wait compared to making the same purchase with financing. That is because you only need to recoup the down payment and loan closing costs before breaking even on the upfront expenses. After that, as long as the equipment produces more income than its financing costs, you’re making a profit on your construction equipment purchase.
3. You Build Equity for a Rainy Day
Not every piece of equipment is worth enough to wind up with resale or refinancing value. Short-lived tools and devices like computers or mobile devices are a great example of that. Heavy construction equipment retains its value for a long time, though, and that makes it useful if you ever need to refinance it for working capital.
Like real estate investments, heavy equipment purchases wind up being both valuable present-day tools and financial planning instruments. Secured loans are a lot less expensive dollar for dollar than unsecured options, so if you ever use working capital loans for operational financing, an equipment purchase is a great way to set up a rainy-day plan.
Learn More About Financing or Refinancing Equipment
The best way to get a feel for the market is to check out financing quotes from a couple of top providers in your area. That will give you a sense of the interest rates you can access for the loan sizes you need. From there, it’s just a matter of shopping for the combination of cost and loan term that suits your business best so you can make the most of your construction equipment purchase.