Prior to your decision of visiting the nearest heavy machinery dealer, it is strongly recommended to ask key questions to yourself and to the dealer facilitating the loan on heavy equipment. The earthmoving machine loan no doubt makes the purchasing easy but there could be certain hidden charges or conditions unfavourable for you as a buyer. Hence, it is essential to learn about the few very important questions required to ask before applying for a heavy equipment loan. Here, you will get to know about the same and it will help you make the right decision.
Going for a heavy equipment loan is a key decision and hence one needs to stay extra careful. Leasing construction machinery and other heavy equipment that have better versions being released now and then will make it possible for your company to enjoy the perks of the resources without having to spend a lot of money on it. The type of heavy equipment loan you need will depend on the size of your company, your geographical location, and the type of products your company uses on an everyday basis.
In today’s times, small businesses need financing options more than ever to support their ideas and challenge themselves to do better. Luckily for all category of business owners, there are various heavy equipment loan schemes enlisted by local government, private bodies, and even the banks in a country, turning your dreams of having your own business grow to reality at a fast pace.
However, instead of going for a loan blindly just based on what a finance professional told you, it will be a better decision to research about all your available options, and evaluate the merits and demerits about heavy equipment loans and then choose to complete your loan application. Doing this will not only help you to know the perks of the loan but with better education; you will be able to make better decisions for your business.
Always get a clear picture of the condition applicable with the specific heavy equipment loan in case you are going to apply for a small amount of loan to buy varied type of heavy equipment required for the smooth operation of your business. A business can also seek assistance of a financial expert for better experience.
With the questions listed below, you will know whether you should go for a loan with the leasing company:
- Does the company provide a lease on the heavy equipment you need for your business?
When it comes to heavy equipment, it includes trucks, excavators, wheel loaders, cranes, dozers, compactor, trailers, forklift, and many more. You need to ask in specific words and get it mentioned on the contract you will be signing, if the leasing company provides loan on the type of heavy equipment you will need for everyday operations in your business. Many times, the professionals at the leasing company know about the equipment but do not provide a loan on it. That is why your leasing company must know the ins and outs of the equipment so that it becomes easy to repair, or upgrade it in the future.
- What is the support extended by the leasing company to you?
When it comes to business transactions, you need to ask the leasing company about the type of service that will be transacted by the representatives of the company. As a business owner, you will have to consult with the representative to choose the right equipment.
- What is the interest rate charged for the heavy equipment loan?
The interest rate charged by the leasing company will make a big difference on your purchase. Generally, borrowers who already have an account with the bank are offered relatively lower interest rates. The existing rate charged by the banks on heavy equipment is 9.5% per annum.
- What is the total assistance financed by the bank?
Some banks finance the total amount of the heavy equipment with the applicable interest rate. It is always better to pay 20% of the total amount on your own and then get the remaining amount financed by a bank. This ensures that you do not have to strain your monthly expenditure with the higher EMIs.
- What is the final price that I have to pay for the equipment as EMI monthly?
When you apply for a loan on heavy equipment, the charges include, processing, documentation, prepayment, foreclosure, late charges, a default in payment, the interest rate, etc. That is why the overall price of the earthmoving equipment increases. You should ask for the final price of the heavy equipment that you will have to pay as the EMI. Also, you can check the principal loan amount and the tenure to get the lowest interest rate and save money on your final amount due.
- How long should I take the heavy equipment loan for?
Any loan, especially on heavy equipment, is going to take some gross amount monthly from your account. The best thing to do is not take a loan with a heavy EMI amount since that is going to put financial pressure on your monthly budget just because you want to decrease the tenure of the loan amount. In case your business becomes stable, you can pay multiple EMIs at once; a condition which is allowed by many banks.
In addition to the above important questions, carry your documents like the identity proof, address proof, and age proof along with you while visiting the bank or the leasing company. Go for heavy equipment that not only makes the operations of your company smooth but lets you achieve tremendous success in your endeavours.