Menu
View Details

Tap to Call

Blog

Cleveland Brothers

How to Finance Used Construction Equipment

By: Cleveland Brothers
July 15, 2021

Buying used construction equipment is an excellent way to minimize costs and boost productivity on the job site. However, just because used machinery costs significantly less than buying new equipment doesn’t mean it won’t make a dent in your bank account. That’s why many organizations choose to finance their construction equipment to make investments easier and more achievable.

If you’re thinking about adding used machinery to your fleet, consider financing your construction equipment. Paying for your machines gradually rather than handing over the full cost upfront makes investing in these solutions significantly more manageable.

Before financing used construction equipment, it’s essential to know what to expect when taking out an equipment loan and how to go about the financing process in the most informed and logical manner to ensure you get the most value for your investment.

What to Know Before Financing Used Construction Equipment

There’s a lot more to financing equipment than just paying off a loan in monthly segments. Before you can finance your used construction machines, you must choose a plan that best supports your company’s specific needs.

Be sure to think about all of the following considerations before committing to a financing plan for your used equipment:

  • Decide How Much You’re Willing to Spend

When you borrow money from a lender, it’s crucial that you’re able to pay it back as agreed—otherwise, you may incur additional fees, penalties and interest charges that can hike up your bills or even result in equipment repossession, ultimately defeating the purpose of financing. That’s why it’s essential to create a budget that realistically reflects your financial capabilities.

Before choosing a financing plan, you should decide how much you’re willing to pay upfront and how much you can contribute monthly for each subsequent payment.

  • Know Your Financing Options

All financing rates are different, each with varying flexibility, interest and repayment terms typically ranging from one to three years. When choosing a suitable plan for your company, you should consider how old the machine in question is. Equipment that’s over a decade old poses a higher risk of failure than more recent machinery, resulting in considerably higher finance rates and shorter loan terms.

  • Make Sure You’re Qualified

When you finance used construction equipment, you’ll have to submit an application before being approved for the loan. Lenders will consider numerous financial aspects before deciding whether they’ll accept a company’s application, such as their past business success, history, revenue and current credit score. Be sure to evaluate your financial position to determine whether you meet these standards.

  • Talk to the Experts at Cleveland Brothers

Perhaps the most important thing you should do when financing your equipment is to talk to your dealer to learn more about your options. When you have a clear idea of your financing choices, payments and interest rates, you’ll be able to budget appropriately and secure a higher return on investment. For more information on what’s available, you can reach out to a Cleveland Brothers financial expert for the best guidance.

Understanding Heavy Equipment Financing and Loans

Though heavy equipment financing comprises the same general rules and processes as any type of financing, it has several key differences that need considered. Before taking out a loan for your used construction machinery, it’s vital to understand the basics behind financing construction equipment.

What Is Heavy Equipment Financing?

Construction equipment financing enables companies to take out a business loan or lease to purchase machinery without paying for it in full. Instead, those who finance their equipment can pay off their loans gradually. Heavy equipment financing is different than traditional equipment financing because it only applies to large pieces of machinery that perform heavy-duty functions, such as forklifts, dozers and excavators. Standard equipment financing refers to smaller, simpler items like computers, printers and furniture.

What Is the Difference Between Financing and Leasing?

Though many individuals use the terms “loan” and “lease” interchangeably, these payment methods are fundamentally different. Through equipment financing, you’ll make loan payments until the end of your term in exchange for full equipment ownership.

On the other hand, leasing machinery is a lot like renting—you pay to use the equipment, but you don’t actually own it during the lease term. However, you may have the option to purchase the machinery once the agreement is up.

What Do You Need to Apply for a Loan on Used Machinery?

It’s generally easier to qualify for an equipment loan than it is to be approved for other types of loans because the financed machine acts as collateral for the lender. However, there are still a few things you’ll need when applying for an equipment loan.

Though every lender is different, you’ll likely qualify for a plan if your business has good credit, a consistent cash flow and records of being in operation for at least a year. Even if you don’t meet these standards, you may be able to qualify by offering a down payment.

Once you’re eligible for a heavy equipment loan, you may need to present the following documents to your lender to apply:

  • Driver’s license
  • Financial statements
  • Voided business check
  • Tax returns
  • Recent bank statements
  • Equipment quote or invoice

Benefits of Financing Used Construction Equipment

When you finance used construction equipment instead of leasing, you’ll experience all of the following benefits for your company:

  • Financial flexibility: Equipment loans offer flexible payment options that companies can adjust based on their monthly revenue, seasonal business fluctuations and other cash flow needs.
  • Expense planning: Instead of paying one large expense upfront, financing allows businesses to better manage their monthly expenses through financial planning, budgeting and tax considerations.
  • Capital preservation: Making monthly payments through financing allows you to preserve capital and use it wherever it’s most needed.

Cleveland Brothers offers numerous financing options to choose from based on your unique financial situation. Our flexible financing options include these plans:

  • Installment sales contract
  • Full payout finance lease
  • Finance lease with a balloon or option
  • Fair market value tax lease

Browse Used Construction Equipment at Cleveland Brothers Today

Cleveland Brothers is dedicated to providing businesses across Pennsylvania, northern West Virginia and western Maryland with new and used construction equipment options that set the standard for quality and dependability while delivering exceptional customer service. To learn more about our financing solutions, click here.

To get started today or to learn more about our used equipment availabilty and financing options, complete an online contact form.

This content is created and reviewed by the Cleveland Brothers team. With a customer-focused mission, Cleveland Brothers is dedicated to providing you with total solutions to keep your job running smoothly. Contact our team today for more information.


SHARE THIS: