New and Used Plant Finance

[dcfasset]

Well you are right there, although HP is still a major part of the business we do we are always looking to varied ways of funding.

To give you an example of a deal I am currently looking at where the company are looking to purchase 3 nearly new excavators for around 50k: they do not have a massive amount of cash just sitting around for the deposit so instead we have looked at putting some unencumbered machines forward as deposit. The finance company have taken a couple of older (2002) dumpers and valued them equivalent as the 5k deposit they would have been looking for.

It is also very true that finance companies will now look a vat deferment but not in every case. I have a few clients that will only every opt for lease purchase, for anyone that is not aware this is where you effectively lease the asset on a fixed monthly rental and have the option at the end to buy, give back or continue to lease via a secondary rental. Most clients with plant just make a payment of generally 2 rentals to take title of the equipment and then either continue to use or sell the item.

For a finance company it is all about risk ratios so when thinking about buying and looking to get the best rates, remember these points:

Age of the asset, what will it be worth in 3-5 years
How long has your company been running
Are you home owners
deposits (the bigger the better).

Great rates:
Established company, brand new kit, home owner, good net worth,10% deposit over 3 years,

Ok rates:
New starts, kit over 4 years old, breaking even, 10% deposit over 4 years.

None starter:
New start, Kit 10years old, tenant, losing money every year, no deposit over 5 years

Finance Lease: Deposit + 24-72 monthly rentals + vat each month
Hire purchase: Deposit + all vat upfront then 24-72 monthly payments
Sale and leaseback: No deposit + 24-72 monthly payment

Hope fully I have explained some options but there are so many more which I am sure we will cover over time.

[dcfasset]

None starter:
New start, Kit 10years old, tenant, losing money every year, no deposit over 5 years


Sorry got carried away their clearly you cant be a new start and loss money ever year!! but maybe your have liquidated a company recently.

Also just to clarify as I do not want to seem like I am shutting the door to new starts, if you are not a home owner there are funders that will take someone else as guarantor.

[Local Diggers]

Where does credit ratings come in? Mine is a little below average with two paid ccj's but the business shows a profit and i own my home outright. Am i legible?

[Local Diggers]

Lol i mean elegible! Legible... Clearly not

[dcfasset]

Credit rating is relevant but not as much as if you were going for a traditional loan, this is due to the fact that the finance company always have security of the asset were things to go wrong.

Seeing as you are a home owner with no mortgage and the CCJ's satisfied you should have no problem attaining finance.

Hope that helps?

[diggerhayne]

i have a question why do finance companys shy away from older dozers they hold there money better than a excavator,i looked at acouple of 15 yr old ones and couldnt get a lookin

[dcfasset]

Your right that most premium lenders will shy away from assets over a certain age, but there our funders out there that will look at a 15 old dozer as long as the values stack up.

As with all asset based lending there objective is to look at the deal and how quick they can get out of it should something go wrong, and maybe there is a smaller market when it comes to older dozers?

But there are many ways around this ie re financing other equipment or even and secured/un-secured commercial loan.