Tips for Construction Companies to Use Finance Equipment
Whether you’re just launching a construction company startup or looking to expand your services, you need a reliable way to secure costly machinery. Construction requires highly specialized equipment that can be a serious investment. If you’re looking for ways to raise funds to start offering new services to your clients, learn how to finance equipment and grow your company the right way.
While you can use financing to own the equipment outright, a popular financing option is an equipment lease. When you lease equipment, you can enjoy a number of benefits. First, leasing doesn’t require you to purchase your equipment. This means that many of the risks of machinery ownership, such as sudden breakdowns and obsolescence, don’t apply to you.
Leasing allows you to start using your equipment from day one. You’ll simply pay a weekly, monthly or yearly fee to continue to use the machinery necessary to keep your construction company going. Once your lease is up, you have a few options. Your first option is to purchase the equipment you’ve been leasing at a discounted price. This allows your lease payments to be applied in part to the cost of the equipment.
Another option after your lease is through is to upgrade your equipment. This option helps you avoid the risk of using outdated equipment. This benefit is easy to miss, but an essential reason to consider equipment leasing. Too often you use machinery for years, only to discover that it has greatly depreciated in value. Some machinery is very difficult to sell used, so you may not be able to get any value out of it as you attempt to upgrade. The additional time, stress and cost of selling equipment are all reasons to choose to lease. Once your lease runs out, you can simply sign a new lease with the latest model of the same high-quality machinery you’ve been using.
There are a number of ways to finance equipment, so review your options carefully. You may need to put money down, and most leases and loans use the equipment itself as collateral. Depending on the type of financing you choose, your credit score and your lease length, you can receive a wide range of interest rates. Discuss your rates with your lender. If you choose the same lender for multiple vehicles or essential construction equipment, you may be able to lower your rates and receive more generous terms.