Equipment World Digital Magazine
Issue link: http://read.dmtmag.com/i/860257
August 2017 | EquipmentWorld.com 28 N ow that you've picked out that used excavator or wheel loader to add to your fl eet, the next step to fi gure out is how to fi nance it. Thanks to dealers selling their rental machines, leases ending and trade-ins arriving, there's plenty of supply for high-quality, late-model equipment on the market, lenders say. They also indicate there's plenty of credit available to help make those deals. Borrowing money to buy used construction equipment, however, may take some shopping around to fi nd the deal that best fi ts your needs. Lenders say just looking for the lowest interest rate might not make the most long-term fi nancial sense. "It's not like fi nancing a new car or a used car," says John Crum, senior vice president at Wells Fargo Equipment Finance. "There are so many things that are a factor in buying or fi nancing a used piece of construction equipment." Get to know the machine One of the fi rst things lenders will want to know is the age of the equipment you're buying, what condition it's in and who owned it before you. Because equipment doesn't have registered titles like cars and trucks, buying used machinery can take lots of homework to make sure there's clear title to the machine and no liens against it. That's especially true in contractor-to-contractor sales and when equipment has changed hands several times over the years. The lender will want to see all the bills of sale or proof of ownership from the original sale forward. "It can get complicated, time-consuming and costly to do that if you're doing multiple lien searches," Crum says. "It can be a long and frustrating process for the buyer and the seller." One way to prevent such lengthy searching is to purchase from a franchise dealer, he says. The dealers generally have already done the title work. Along with determining the machine's pedigree, lenders will want to research its value. Be prepared to discover that the price you're paying may not match the lender's loan value. Lenders typically look at what similar machines bring at auction or average resale. With that dollar fi gure determined, they can then decide how much money they're willing to lend. But that's just part of the loan picture. The other pieces to the loan puzzle focus on the borrower. There's an application for that Most lenders, be they banks or equipment manufacturers' fi nancial services, will require you to fi ll out an application to borrow money. And in many cases, if you've got good credit and are buying a late- model, low-hour machine, that's all they'll need. They'll research your credit history and credit references, and then structure the loan terms based on that information and the value of the machine. The process becomes a little more complicated for older machinery or if the borrower has some credit problems. Then, the lender may seek fi nancial statements from used equipment report | continued Lenders: Plenty of credit available for used-equipment buyers By Don McLoud