You must have heard about heavy equipment financing or construction equipment financing that lets you grab a business loan for buying construction equipment for your business. By obtaining a loan, you don’t have to pay out-of-pocket for buying that machinery. The equipment may be used or new but in either case when you buy the machinery with the help of financing services as collateral for financing.
Just as Hovair Systems is a company that offers heavy load transport at an affordable rate in the market, there are similar such financial institutions that offer you heavy equipment loans. Here are a few things to keep in mind for grabbing such loans.
Qualifying for heavy machinery loans
Different lenders of heavy equipment loans have different qualification criteria. However, there is a generalized idea of the qualification criteria required for financing heavy equipment. Fortunately, the bar isn’t high for qualifying for heavy machinery loans. Here are few important factors that are considered:
- Credit Score: In case you have a credit score of more than 600 and you’ve been in business for more than a year, you can qualify easily for heavy equipment financing.
- Down payment: Even though you have poor credit score and medium business revenues, you are allowed to get financing by providing an adequate down payment. For example, you wish to buy a machine that’s worth $30,000, you should give a minimum of $10,000 as down payment.
- Cash flow: In case your credit score is not good enough, but your revenues are pretty high, as against the cost of machinery needed, you may qualify for heavy machinery loan just because you have proper cash flow.
The best part of obtaining construction equipment loans is their versatility. The lender should give you a loan unless you have a bankruptcy case or you’re on child support payments.
Can borrowers with bad credit get heavy equipment loans?
Borrowers who are already having a poor credit score will be more likely to get heavy equipment loan as compared to other kinds of financing options. Heavy machinery loans are given based on collateral by the machine they finance. This reduces the risk of lenders. In case you default on the loan payments, the lender will seize the machine to recuperate the losses.
So, it can be clearly understood that poor credit is never a deal-breaker for getting approved for a loan. In case the borrower’s credit is poor but he has a good revenue, he can get a loan by offering a sufficient down payment.
Even though you’re approved a loan with poor credit, the interest rates will be higher than borrowers who take out loans with good credit. Nevertheless, if you have enough time to wait for the loan, it is better to take credit repair steps before applying to grab a loan at the most reasonable rate.
Therefore, now that you’re aware of how to take out heavy equipment loans, you should start negotiating with a lender in order to discuss the terms and conditions.