Builders Save Big with Smart Equipment Financing Moves
Types of Equipment Financing
Several types of equipment financing options are available, each with its own set of benefits and considerations. Here are some common options:
- Equipment Leasing: This option allows you to use the equipment for a specified period while making regular lease payments. At the end of the lease term, you may have the option to purchase the equipment, return it, or upgrade to newer models.
- Equipment Loans: Similar to a traditional loan, this involves borrowing money to purchase equipment outright. The equipment itself often serves as collateral, which can result in lower interest rates compared to unsecured loans.
- Hire Purchase: With this option, you make an initial deposit followed by regular installments. Once all payments are made, ownership of the equipment transfers to you.
Real-World Examples and Pricing Context
To illustrate the potential savings, consider this: a construction company that opts for a $100,000 equipment lease can expect to pay around $2,000 monthly over five years. In contrast, purchasing the same equipment outright could strain cash reserves and limit financial flexibility. Additionally, many financing companies offer promotions such as zero down payment or reduced interest rates for the first year, making it even more enticing to browse options and secure the best deal3.