How Long Can You Finance Heavy Equipment?

Businesses that require large machines often have high overhead costs. To get started or to expand such a company, heavy equipment financing is needed, as the cost of these items is often prohibitive. Luckily, there are leases and loans available to suit every lender, and they can be of various lengths. That way, businesses retain their flexibility and capital while gaining access to the best machinery available.

How Long Does Heavy Equipment Financing Last?

Normally, the people who lease equipment from us will opt for a term between 12 and 36 months. However, heavy equipment can be borrowed for much longer, since it usually lasts for many years. The length of your lease will depend on several factors, such as the useful lifespan of the type of equipment you need and whether you are opting for a new or used machine.

What’s more, we can tailor your lease to your specific needs, so it can be shorter if you don’t know exactly what you will want to do in several years’ time. That way, you can choose to end your lease and move on to different projects, extend it and keep using the piece of equipment, buy the item up front, or even upgrade to a newer version and take out a new lease.

Types of Heavy Equipment

Almost all types of heavy equipment can be leased, and we work with a wide variety of brands, so you should find exactly what you need from us. If your business is agricultural, you might have to borrow a tractor or machinery for specific harvesting processes. Many businesses in the construction industry need cranes, tunnel boring machines, and various types of saws.

Other equipment required for various businesses might be street sweepers, dump trucks, backhoes, and pile drivers. No matter what your requirements are, you should get in touch with us at Noreast Capital and speak to your dedicated account manager. We can figure out how to access the equipment at the best price possible.

Considerations

Together, you and our specialist will decide what the best loan term is. If you expect to use the piece of equipment for the foreseeable future, you might opt for a new machine and a long lease term. However, if you aren’t sure yet or you only require it for a specific project, you could go for a much shorter time frame and return the item to us as soon as you no longer need it.

In such a case, you might consider choosing a second-hand machine, as this could be cheaper and more flexible. As your needs change, you can always come back to us and ask us for an upgrade and a new lease. Because you won’t be locked in for a very long time, you’ll have the flexibility you need to change your strategy and expand or update your business.

What Type of Financing Is for You?

The most common type of heavy equipment financing we offer is a lease, but you could also opt for a loan if this better suits your needs. The two ways of borrowing are quite similar, but ownership of the piece of equipment is handled slightly differently. When you lease, we remain the owners, and you are more flexible at the end. On the other hand, a loan allows you to buy the item off us with a small down payment upfront.

Leasing

Leasing allows you to use the piece of equipment you need without actually purchasing it from us. For the duration of your lease, we will own the item, but you get to use it by paying us a monthly fee. There are different types of arrangements, which makes this agreement extremely versatile. For example, you can choose a long lease and start using your machine without paying any money upfront.

At the end of your term, you can buy the equipment from us for $1. Alternatively, you could choose a much shorter lease, maybe two or three years, and either purchase the item at fair market value or give it back at the end. This second arrangement can be great for businesses that are just starting out or that are facing uncertain market conditions, since they retain all the flexibility.

A Loan

When you opt for a loan, you are buying the piece of equipment you need from us on finance. This means that you will have to provide us with a down payment, which might be around 15% of the total value of the item you’re purchasing. Then, you will repay us the remainder in monthly installments over several years. Because heavy equipment is expensive, it might take you 6-10 years to fully pay off the item.

In general, the interest rates can be lower for loans than for leases, so you could pay less in total if you choose this option. However, you will have to put down a deposit, which can be a lot of money if the equipment you need is very expensive. What’s more, you have less flexibility than with a lease because you don’t have the option of returning the equipment or upgrading at the end of your loan term.

Your Application Process

Now you know what you can lease and how the various arrangements differ, you might wonder how challenging the application process is. Fortunately, you can receive an answer in a very short time. Simply submit our application form, and your dedicated account manager will get back to you with some options. If you’re looking for under $50,000 in credit, you’ll receive an answer within a few hours.

For businesses that need more than this amount, the process might take one or two business days, as you’ll need to submit additional financial statements. To avoid this wait time and make sure you’ll be able to get the financing you need, you could open a lease line of credit ahead of time. This means that you’ll have the credit your business requires whenever you’re ready to start acquiring equipment.

What Are the Benefits of Borrowing Your Heavy Equipment?

When it comes to setting up your business or expanding your current operations, there is a lot to consider. You’ll need some office space, a number of specialized employees, and all the equipment required for the work. Because the first two points can be expensive, it’s often easiest to finance the last one and conserve some of your capital.

Nowadays, there are so many different options available to borrowers that you’re sure to find the exact lease to suit your needs. This gives you and your business more flexibility, so you can quickly respond to different market conditions and upgrade your equipment when needed.

Conserving Your Capital

The most important reason why most companies lease or finance their equipment is that they can conserve their money that way. Many startups don’t necessarily have enough funds to purchase everything they need, so borrowing is the only option open to them. A flexible lease is the best way forward because there is no hefty down payment required.

Similarly, businesses that are expanding already have a number of costs to deal with, so not having to purchase all their equipment upfront can be a relief. Heavy equipment financing allows such firms to deploy their resources more efficiently. For example, they can invest the money saved back into the business and generate more revenue.

A Lease Tailored to Your Situation

Every business has different requirements, which is why there are so many types of arrangements available. If you’re just getting started and don’t have a lot of revenue yet, we can delay your payments for the first few months, which allows you to use all your resources on building up a clientele. Similarly, businesses that operate seasonally could benefit from higher payments during the ‘on’ months and lower payments during the ‘off’ months.

At Noreast Capital, we offer numerous such arrangements, which can facilitate the running of your firm and help you stay on top of your running costs. You can speak to your account manager about the specific requirements of your company and the fee structure that works best for you.

More Flexibility

Heavy equipment is expensive and usually very big, and it is a long-term investment. If you buy your machines upfront, you will have to keep them for at least ten years to justify the cost, and you’ll also need a permanent place to store them. However, a lease can be shorter than this, so you could use your equipment only for the projects that require it and then return it to us once the work is completed.

This is especially useful for businesses with a somewhat open future. Maybe you’re not sure yet whether you’ll want to expand, or you are currently exploring a new niche. In such a situation, leasing can be the perfect way to keep your options open.

Heavy equipment financing brings many benefits for business owners, who can keep their capital and invest it back in the business, remain versatile and adapt to market conditions, and structure payments in a way that suits them. Call us today at Noreast Capital to find out more and get started with us. You could have your lease or loan in place within one to two business days.