How to Finance Heavy Equipment with Bad Credit?

Alternative Small Business Funding

There are plenty of businesses that require heavy equipment. Whether you are planning on starting a business, expanding an existing company, or replacing aging gear, getting access to the right equipment is key. But this can cause problems.

Heavy equipment can come with a substantial price tag. If you have a poor credit score, getting money can be difficult. Thankfully, there is an option that you can explore. You might want to look at alternative financing. Let’s take a look at how this process will work.

Will a Bank Provide a Heavy Equipment Loan?

One of the most common questions asked is what lending institutions can you turn to? Many people want to look at the banks. After all, this is the most traditional lending option. However, if you have bad credit, it won’t be the right choice. There are a few potential problems that you can run into.

First, you might find your application rejected outright. If you have a credit score of under 650, the banks will often rule you out as a loan candidate. The good news is that you will be able to improve your credit score and get into a range where they will consider approving your application. Things like paying down your debt and reducing the amount on your credit cards are good places to start. But this is a slow process. In many cases, it will be months before you see an improvement.

Another potential problem is that the banks will charge a high interest rate, to compensate for the increased risk. If you are in a difficult financial situation to start with, costly repayments can make things even more challenging.

At other times, they will require a sizable deposit, to reduce the risk. This can be 10 percent of the loan value. This can mean that you need to save up thousands of dollars. This can take months.

Even if you do meet the minimum loan conditions set out by the banks, or can convince them to overlook your poor credit, getting a loan will be a slow process. It will take a few weeks for them to assess your application and decide whether to approve it. From there, it will take even longer to put the money into your account. If you want to purchase heavy equipment quickly, to take advantage of market conditions, this process will be too slow.

The good news is that you can turn to an alternative finance provider. They understand that there is more to a business than your credit score. Because of this, they are willing to make a loan to someone who has bad credit.

Getting Heavy Equipment Financing With Bad Credit

There are many circumstances where having bad credit can act as a handbrake. The good news is that this isn’t one of them. An alternative lender understands that you can’t judge a business based on a single metric. After all, everyone goes through tough patches. You can use the heavy equipment to come out stronger on the other side.

The reason they can offer attractive loan rates, compared to the banks, is because of the way the loan is structured. The loan will be secured by collateral. In this case, it will be the heavy equipment that you are using the loan to purchase. If you fail to make the payments, they can seize and sell the equipment. This type of loan reduces the risk to the lender, so they can offer you a better deal.

There are a few types of businesses that can benefit from this type of structure, including:

• Those with tax liens
• People who have gone through bankruptcy
• Businesses that have had previous repossessions

If you aren’t sure whether you can participate, you can apply online. Our team will assess your application and tell you whether you are a good fit for a heavy equipment loan.

Type of Equipment You Can Finance

There is a wide range of equipment that you can purchase using your bad credit business loan. Some of the highlights include:

• Trucks
• Excavators
• Bobcats
• Cranes
• Asphalt pavers
• Forklifts
• Stump Grinders
• Many More Types of Vehicles

There are dozens of types of heavy equipment that our team can help you purchase. If you aren’t sure whether the type of equipment you want to purchase qualifies, give our friendly team a call. They’ll be able to talk you through the vehicles provided.

Types of Heavy Equipment Financing Options

If you are looking to purchase heavy equipment, there are a few options that you can explore. You can either get a loan or choose to lease the equipment. Each of these options will come with a set of pros and cons.

The biggest difference is in who will own the equipment. When you take out a loan, you will be the owner of the equipment. After you have made all your repayments, it will be legally yours. From there, you will be entitled to sell it. Alternatively, you might be able to use it as collateral for future loans.

On the other hand, if you are leasing it, you don’t legally own it. You are just paying to rent it. At the end of the leasing period, you will face a choice. You can pay to purchase the equipment. Or you can return it. Let’s take a closer look at each of these options so you can find the right approach for you.

How Do Heavy Equipment Loans Work?

The first step is deciding what type of heavy equipment you require. This lets you know how much money you need to request when making your loan.

The next thing you need to do is make the loan application. It’s best to use a reputable company like South Florida Funding Group. The good news is that the loan application process is easy. It can be completed online. It will be processed quickly and, if approved, you can have the money in your account fast.

Once you have the heavy equipment you need, you just need to make repayments on your loan. After the loan has been paid off, you will own the heavy equipment. This is best for equipment that you are planning on keeping for the long term. Given that most equipment can last for over 10,000 hours, a well-maintained piece of gear should be able to last for several years.

What Affects Loan Repayment Rates?

There are a few elements that need to be considered when deciding how much the loan repayments will be. The most important is your current financial situation. There are a few things that will be considered, like the length of your term. Your bank accounts will also be assessed. This will tell the lender how likely you are to make repayments.

If they deem you to pose a significant risk, you will be charged with a higher interest rate. Before you accept the loan, make sure to consider the monthly repayments. You want to make sure that you get something that will be manageable. The good news is that many alternative lenders will be willing to work with you. In many cases, the rates they offer will be more competitive than those provided by the banks.

 If you are having problems making a repayment, give the lender a call. They will be able to talk you through the options you can explore. The loan agreement can be tailored to suit your business, so you will be able to thrive.

How Does Leasing Heavy Equipment Work?

The other option that you can explore is leasing the heavy equipment. You will need to pay a small monthly fee to maintain the right to use the equipment. Similar to loans, if you don’t make the repayments, the lender has the right to take back the equipment. However, you won’t own the equipment. At the end of the lease period, you will need to return it. How long the lease will last will depend. Often, though, it will be between six to 24 months.

Sometimes, the lease contract will give you the option of purchasing the equipment outright when the lease is up. Often, this will be at market value. Though sometimes, it will be a 10 percent purchase option. This means that you will be able to buy the equipment for 10 percent of its value. If you intend to buy the equipment at the end of the lease, it’s best to talk to the provider. Be clear about whether buying the equipment at the end of the lease is an option and how much you will need to pay.

Because you don’t own the equipment, there are a few restrictions you will need to consider. For example, there might be restrictions on the way you use it. Furthermore, over the long term, leasing is often more expensive than a loan. This is because you won’t be working towards your ownership of the equipment.

But there are some times when this might be the best option. If you are planning on upgrading the equipment every few years, it might be best to take out a lease, rather than owning it outright. This might also be the best option if you can’t afford the down payment needed for a loan. Furthermore, a lease is a good choice if you only need the equipment for a short-term project. After a few months, you can give it back. If you want to organize a lease, you can talk to our team. They’ll be able to work with you to set everything up, creating a payment plan that you can afford.

What Are the Requirements for a Bad Credit Heavy Equipment Loan?

The good news is that an alternative finance provider will be more likely to give you a bad credit business loan. However, there are still a few requirements that you will need to meet. First, you’ll need to have some experience running a business. Usually, you will need to have been operating for at least three months. You also need to have a basic level of monthly income. You will need to be making at least $6,000.

The good news is that you don’t need a mountain of paperwork. All you may need are some bank statements. This is easy to get. Because of this, you should be able to apply for the loan in a few minutes. As long as you meet these simple requirements, though, you won’t have any issues getting approved for the loan.

When Can You Get the Money

When you are purchasing equipment, it’s important to make sure that you get the money as quickly as possible. This will allow you to get the gear you need to grow your business. However, when you go through a traditional bank you can be waiting a while. It’s common for it to be weeks before the loan is assessed. You’ll have to wait a few more weeks before you can get the money you need.

The good news is that an alternative lender understands that you need the money urgently. Because of this, your application will be assessed quickly. You’ll know whether your loan is approved within 24 hours. From there, the money will be in your account fast.

How to Get Started?

 If a bad credit heavy equipment loan sounds like what your business needs to succeed, get in touch with South Florida Funding Group. You only need to fill out a one-page application letter and provide a few records. This should only take a few minutes. If you have any questions during this process, don’t hesitate to give our friendly team a call at 786-544-2700.

Once you have submitted the paperwork, we will assess it. This is a fast process that should take less than 24 hours. If you are approved, we will give you the paperwork to sign. Read it over and make sure that you are happy with your obligations. If you agree, we give you the money and you can purchase the equipment you need. This has been designed to be as straightforward as possible. So, apply today to find out how we can help you get the equipment your business needs.