If you're in the construction, excavation, forestry, farm or landscaping business, you know how vital heavy equipment is to your operations. However, buying equipment outright can be a daunting investment, especially for small to mid-sized businesses. One solution that has grown in popularity over the years is equipment leasing.
Learn all about heavy equipment leasing and why it may be a wiser option for your business than purchasing or getting a loan.
What is Heavy Equipment Leasing?
Heavy equipment leasing is a financial agreement that allows businesses to rent construction machinery, like excavators or bulldozers, for a set period. The lease period typically ranges from 12 to 84 months depending on the equipment, industry, or agreement to finance heavy equipment used. Heavy equipment leasing contracts come with several payment methods, ranging from regular monthly payments to a seasonal payment schedule according to the business demand.
Industries that Need Heavy Equipment
Several industries benefit from heavy equipment leasing, including construction, mining, forestry, agriculture, and landscaping. Construction businesses use heavy machinery such as bulldozers, loaders, and cranes to move and level heavy materials and objects that require specialized equipment. Mining companies use heavy equipment like trucks, shovels, loaders, and excavators for extracting minerals from the earth. Agriculture businesses use equipment to plow, plant, and harvest crops. Landscaping companies use heavy machinery to enhance outdoor features like parks, golf courses, and commercial properties. Forestry companies use heavy machinery like feller bunchers, skidders, and forwarders to harvest trees.
Benefits of Heavy Equipment Leasing
Leasing heavy equipment instead of buying or getting a loan has several advantages for businesses.
Cost-Effective
Leasing machinery is more cost-effective than buying or getting a loan. Some equipment can be expensive, and tying up capital in a purchase can impact cash flow significantly. On the other hand, leasing allows companies to access newer equipment without the expense. Additionally, leasing can free up capital, funds that businesses can use for other areas of the business such as marketing or recruitment.
Faster Approval Process
The process for approving heavy equipment financing is usually faster than traditional bank loans. Businesses won't have to spend months gathering extensive financial statements or presenting their credit history to the government. Often, equipment leasing companies can approve applications in as little as 24 - 48 hours.
Customized Lease Terms
After evaluating your business needs, leasing companies can tailor a lease agreement to suit your circumstances. Depending on your needs, you can choose various payment methods and lease terms.
Access to More Equipment
Leasing allows companies to access more equipment than they could purchase outright. Leasing also reduces the risk of outdated equipment, which is something that can quickly happen as technology advances.
Tax Benefits
One of the most significant advantages of leasing heavy equipment is the tax break it offers. When a company buys equipment, it can only write off depreciation. However, if you lease heavy machinery, your business can typically write off the entire lease payment. This can be a significant advantage for small to mid-sized businesses that need to reduce their tax burden.
How to choose a Heavy Equipment Leasing Company
When selecting a heavy equipment leasing company, it's important to consider several factors such as experience, reputation, flexibility, customer service, and financing options. Here are some key points to take into account:
- Experience: Look for a leasing company with years of experience in the heavy equipment industry, such as Fincap. An experienced company will have a better understanding of the market trends, equipment specifications, and customer demands. They should also have a solid track record of providing reliable service to their clients, which can enhance your trust in them.
- Reputation: Before selecting a leasing company, it's essential to research their reputation in the industry. Look for reviews and testimonials from previous clients to understand their level of customer satisfaction. A company with a good reputation for customer service is more likely to provide high-quality equipment and services that meet your business needs.
- Flexibility: Every business has unique needs, and the leasing company you choose should be flexible enough to adapt to your needs. Picture a company that offers a wide range of heavy equipment for lease with flexible payment plans and lease terms customized to fit your budget and business requirements.
- Customer service: Excellent customer service is critical when it comes to heavy equipment leasing. A leasing company that provides responsive and supportive customer service can make the leasing process more efficient and hassle-free. Look for a company that offers personalized service, such as a dedicated account manager who can help you throughout the leasing process.
- Financing options: Finally, consider the financing options available to you. A good heavy equipment leasing company should provide a variety of financing options that can fit your budget and business goals. They should also be transparent about the costs involved, such as interest rates, fees, and early termination penalties.
Overall, choosing the right heavy equipment leasing company can help you secure the equipment you need to grow your business while minimizing costs and risks. Take the time to research and compare different leasing companies to find the one that can meet your needs and exceed your expectations.
Contact Fincap to discuss leasing service options that can suit your unique business needs today.
Conclusion
Leasing, as a heavy equipment financing option, is an excellent choice for companies in the construction, excavation, mining, forestry, agriculture, and landscaping industries. With its exceptional benefits such as cost-effectiveness, faster approval process, customized lease terms, access to more equipment, and tax benefits, heavy equipment leasing can provide the flexibility and financial breathing room that small to mid-sized businesses in Canada require to grow and achieve their goals in 2023 and beyond. So, if you're thinking of acquiring heavy equipment, consider heavy equipment leasing to enjoy the multiple benefits highlighted in this Blog post.
FAQs about Heavy Equipment Leasing for Canadian Businesses
What kind of heavy equipment can I lease?
Heavy equipment leasing covers a wide range of machinery, such as bulldozers, excavators, dump trucks, wheel loaders, and others. To ensure you get the right equipment for your industry and business needs, it's important to collaborate with the leasing company and determine the specific options necessary.
Can I negotiate lease terms with the leasing company?
Yes, heavy equipment leasing companies can customize lease terms according to the needs of your business. It would be best to identify what works for you and your business's cash flow. During negotiations, you can discuss payment terms and the leasing period suitable for your company.
What is the typical lease period for heavy equipment leasing?
The lease terms for heavy equipment leasing typically range from 12 to 84 months. Often, the type of heavy equipment financing used and industry determines the leasing period.
How much does it cost to lease heavy equipment?
The cost of leasing heavy equipment varies depending on the type of machinery, leasing period, and leasing company. These financing companies offer flexible payment options that include regular monthly or even seasonal payments to meet the business's cash flow or budget.
How do I obtain financing for heavy equipment leasing?
Most heavy equipment leasing companies have an easy and straightforward approval process. They may require the leasing application, a business plan, and possibly financial statements for evaluation. The good news is that the approval process is often faster than traditional bank loans.
What are the advantages of heavy equipment leasing compared to buying?
Leasing heavy equipment has many benefits over purchasing, including cost savings, customizable terms, tax advantages, access to modern equipment, and financial flexibility.
How long does it take to get approved for heavy equipment leasing?
The approval process for heavy equipment leasing is generally faster than traditional bank loans. In some cases, leasing companies can provide approval within 24-48 hours, depending on the paperwork and business details they need for evaluation.
Is leasing heavy construction equipment a good financing option, or should I have to buy it outright?
You can lease heavy construction equipment instead of purchasing it outright. Leasing companies typically offer a range of heavy construction equipment like bulldozers, excavators, and wheel loaders for construction projects. Leasing is a cost-effective option for businesses that do not have the capital to purchase new construction equipment. By leasing, businesses can access newer equipment without the high purchase price that comes with investing money in new construction equipment.
What is the difference between heavy equipment leasing and loaning?
Heavy equipment leasing is similar to renting heavy machinery for a set period in exchange for regular payments, usually monthly. The equipment is still owned by the leasing company during the lease period. On the other hand, loaning requires taking out a bank loan to purchase the equipment outright, and the equipment becomes the property of the business.