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Why Companies Finance Construction Equipment

July 17, 2019

 

Construction equipment is a costly business expense, and just like many business expenses companies use financing options to buy new equipment. Unlike other business loans, construction equipment loans come with many benefits beyond just being able to purchase that new machine. Your financing company can become like a partner in your construction business. 

 

Let’s look at some of the reasons why construction companies finance their equipment. 

 

Flexible options

The equipment or lending company you work with can create a financing plan that fits your business needs. Whether you’re leasing equipment or obtaining a construction equipment loan, you can easily find a way to finance costly equipment purchases. 

 

Some lenders might offer you terms that work with your business cycle. For example, your payment may be lower when a project is ramping up and revenue isn’t coming in just yet, or when the seasons change and work is slower than usual. 

 

Preserve capital

Paying upfront for an expensive piece of equipment might save money but is also risky if the equipment is a bust. Spending thousands on equipment is an investment, and financing offers a way to preserve capital while you determine whether that investment is ultimately worthwhile for your business. 

 

Steady financial planning

Making few and irregular large purchases means you’ll be spending more in some months than others. With financing, you can more accurately plan your budget and spending because you’ll have regular payments. With a loan you can secure the price for the term, while a lease offers a lower expense for the time you’ll have the equipment. 

 

Get the latest model

Financing allows you to update your equipment more frequently than you could if you were paying cash each time. Having the newest equipment could make your site more safe and efficient. It could also be a differentiator between you and a competitor. 

 

Similarly, financing helps you plan for your current equipment’s obsolescence. You can obtain a lease finance plan that allows for equipment updates, eliminating your risk of owning obsolete equipment. These companies will help you with disposal and ownership when it’s time to upgrade. Many financing companies also allow businesses to right-size equipment and help facilitate trades to ensure you have the equipment you need. 

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