Look at heavy equipment loans holistically to secure the best deal for your business.
Many borrowers focus solely on securing a low interest rate when searching for heavy equipment loans. However, lower rates aren’t always synonymous with better deals. Factors like loan structure and amortization, lender experience, and repayment schedules all impact the suitability of the loan.
Below, we explore why lower heavy equipment loan rates may not always be the best option for your business and what factors to consider instead. Let’s dive in.
Why the Best Equipment Loan Rates Rates Aren’t Always Lower
On the surface, it may appear as if lower interest rates offer borrowers a better deal. After all, lower rates generally result in lower monthly payments. However, interest rates only make up a small piece of the financing puzzle.
Dakota Smith, Head of Operations at Bevel Financial, emphasizes this saying,” It’s important to note that while lower interest rates can save you money in the long run, they may not always be the best choice if they come with less favorable terms in other areas, such as shorter repayment periods or more restrictive covenants.”
Understanding the broader context of financing terms will allow you to make an informed borrowing decision that aligns with your business’ needs and objectives.
What to Consider When Choosing a Heavy Equipment Loan
Impact on Cash Flow
Heavy equipment loans can help or hurt your cash flow. Smart use boosts business growth and profits, while poor management may lead to financial challenges. So, it’s essential to consider how a loan will impact your cash flow before signing the dotted line.
“Opting for a financing option with longer terms and amortization can result in lower monthly payments, freeing up cash for other business expenses,” says Bevel Head of Underwriting, Brian Duncan. “This increased cash flow can be particularly beneficial for businesses with fluctuating income or seasonal operations, as it provides greater financial flexibility.”
Tailored Covenants and Payment Schedules
Every business has unique needs and challenges. When seeking heavy equipment financing, it’s crucial to find a lender who understands your business and can structure a loan with covenants and payment schedules that align with your specific requirements. For example, some businesses may benefit from skip payments during slow seasons, while others may require seasonal or interest-only payments. By prioritizing customized loan terms over solely focusing on interest rates, you can ensure that your financing aligns with your business’ cash flow and operational needs.
Tax Benefits
Interest and lease expenses related to heavy equipment financing might qualify for tax deductions, reducing taxable income, and business tax liability. Consulting with a tax professional is crucial to understand eligibility criteria and benefits. Choosing a financing option with potential tax advantages can result in significant long-term savings, even if the interest rate is slightly higher.
Industry Knowledge
Navigating the world of heavy equipment financing can be complex, and making the right decision requires expertise and guidance. By working with a knowledgeable financing partner, like Bevel, you can access a wide range of financing options and receive personalized advice tailored to your business’ unique needs. A trusted financing partner can help you look beyond interest rates and identify the most suitable financing solution that supports growth and success.
Lender Flexibility
Funding partners like Bevel Financial offer ample flexibility for upgrading and expanding your heavy equipment fleet. As your business takes on new projects or expands into new markets, you may need to acquire additional or more advanced equipment to meet increasing demands. Working with a partner like Bevel ensures you have a scalable solution for growing your business.
Why Borrowers Choose Bevel Financial
Bevel Financial aligns the terms and amortization of your financing with the useful life of the equipment or assets you want to purchase. By offering longer-term financing, Bevel secures lower monthly payments, putting less stress on your business’ finances. This helps mitigate the risk of defaulting on your loan. Bevel offers financing options ranging from 12 to 120 months. Opting for longer-term financing can enhance business cash flow, providing you with the funds to grow your company.
Beyond Low Interest Rates
Interest rates are one of many variables to consider when choosing a loan, and they aren’t always the most critical factor. Working with an experienced lender can help you secure the best solution for your unique business.
Interested in securing a heavy equipment loan? Consult with the Bevel team to discover the best lending solution for your needs.
