Have you ever walked or driven past a construction site and ever wondered who owned the heavy vehicles or equipment being used? It seems like a large investment but is quite common for constriction companies or contractors to own such heavy equipment.
However, unlike owning a smaller everyday vehicle there are certain risks and criteria that come with owning or being able to finance heavy equipment. If you are an independent contractor looking to start or are just curious about how it works, here is the guide to owning heavy equipment including what falls under heavy equipment and how to finance it.
What is considered heavy equipment?
Heavy equipment can range anything from forklifts to large transport trucks, bulldozers, and backhoes. They are needed in industries such as construction, agriculture, landscaping, and excavation to name a few.
While most companies invest in this equipment over a period of time, it can still be a huge cost incurred if not financed properly. It can be quite expensive for new entrepreneurs trying to enter any of the industries. So, once you have an idea of which industry you are trying to go into your next question would be how to go about financing it.
Purchasing heavy equipment
Heavy equipment could easily be six-digit figures. These are sometimes out of budget even for those who have been in the industry for ages. So how exactly do you go about getting heavy equipment financing? Well lucky for you many of the companies who sell this kind of equipment have policies and payment plans that you can choose from. Some of them include loans, payment periods, and even the possibility of to lease.
Which plan to choose?
Since purchasing heavy equipment is not for the fainted heart there are payment options as discussed previously. This could either be leasing or financing. Usually, the companies who sell this have payment periods such as installment plans. They do charge an interest depending on the equipment and length of the payment period.
However, one of the other most common methods is to lease it out. There although you can use the equipment you will not own it until you have paid for it in full.
Some people are also generous and give away their rooftops for all to use. In this case, you will be responsible for maintenance and repairs. One final option is to buy the roof. The benefits of this option can include being able to decide what equipment you want and which location in the building you want it installed.
How can you qualify for the payment approvals?
Similar to how you would apply for a bank loan. Heavy equipment lending companies need to know that you are able to pay for this with the necessary funding. This could include showing your business funds and bank accounts, personal accounts, and current contracts. It may not be the easiest process for the first-timer. But once you have built your reputation it can get easier to purchase more equipment.
If you own heavy equipment maintenance will be a cost you will have to consider too. It will be helpful to plan for this in your budget and keep necessary allowances in case of emergencies and monthly maintenance.
How Much To Budget For Equipment The amount you budget for equipment will vary depending on the type of equipment and service you need. If you are looking to buy a new piece of equipment. Consider how much it will cost to maintain this piece of equipment over its lifetime.