financing heavy equipment business
i just wanted to bring up and discuss how people finance equipment in this business.
what is a good interest for now? payment plans?
do you use a local bank?
large equipment financing firm?
flexibility or payments?
anyone ever try online companies?
do you finance you equipment in bulk? or seperate for each machine?
do you have a flexible lender that will work with you ina bad winter or a bad economy like it is today?
for example. starting a new business now..........if you were going to buy and own....2 excavator...2 dozers...a dumptruck...a lowboy and truck....and 2 skidsteers. 3 work trucks for hauling fuel and workers. how would you set this up for finance?
My advice is to check out all your options.
Leasing companies sound good, but if you have different needs a year or two down the road, you may have a hard time selling current eq and getting different items. Most (not all) leases make you pay the full term interest even if you sell early.
Most outright purchases also have a prepayment penalty for the first year or two.
Interest currently around 8% is good. Big banks typically do not like equipment. I was quoted over 11% from nationwide bank on a deal I got for under 8% from company doing just equipment. Some of these have skip payment plans for your slow season. Just be careful not to bite off more than you can handle.
If going the bank route, with a smaller local bank you can build a relationship and get a good deal as well, but usually not as good as a company doing primarily equipment.
I would reccomend as short of a term as you can afford the payments on. Low payments and a long term look good upfront, but if you need to sell, you will likely owe more than the eq. is worth, and have a balance to pay after the sale. Keep all of you options open.
I wonder what's the good interest for financing construction machines in us now? Does Cat Financial Services offer competetive rates?
Say, here in Russia it's good to get 17% per year. If you lease in local currency Rubles then you'd start with 23%.
What do you have?