Getting Your Construction Equipment Financed

Let’s face it, construction equipment is not cheap to acquire. Whether it is earthmoving, road construction or material handling equipment, they can be a major addition to the cost of a project, especially if the project is a short-term or small scale one and renting is not an option. Financing construction equipment can also become a hassle if you are working on such projects, with financiers asking for additional guarantee if your projected is not, at least, partially funded at the outset.

There are several downsides to not getting the equipment financed at the right time including delay of the project, loss of tenders and mounting rental costs to name a few.

There are a few steps you can take to increase the chances of getting the right finance for your construction equipment.

1.Always keep an eye on your credit score. The key to maintaining a good credit rating is to never default on your payments. This is not to be confused with never taking a loan, that will not necessarily give you a higher credit rating. In general, credit scores are based on: the number of accounts you have, the types of credits (mortgages, personal loans, equipment loans etc.), your used credit vs. your available credit, the length of your credit history and your payment history.

Some things you can do to increase your credit score before applying for finance are- ensure you have no outstanding credit, ensure that the payments for all current loans (till date) have been paid at the time of application. If you have a guarantor with a good credit score, your chances of getting financed increase further.

2.Apply to multiple financiers at once. Credit scores are not constant, and they will vary for the same person at the same time due to differences in methodology of calculation. So, make sure to apply for financing at multiple financiers parallelly. While one financier can reject your case, another might accept it with the same data provided. Applying at multiple financiers saves you a lot of time that would otherwise be spent on each financier individually. This also gives you some peace of mind and sometimes even some bargaining power with the financiers.

3.Ask your equipment manufacturer for finance options. Manufacturers often have some form of agreements with multiple financiers depending on your location. So be sure to check with the equipment manufacturer. Mahindra Construction Equipment has agreements with financiers which can vary based on the dealership and your location, you can contact your dealer/MCE representative for details. This can not only increase your chances of clearing the bar, it can also speed-up the process resulting in shorter wait times and lower anxiety. Manufacturers can also offer loan moratorium options on their equipment Mahindra Construction Equipment has a similar scheme in the monsoon months. Keep an eye out for such offers and you can save on the EMIs during the monsoons.

4.Choose the right equipment. Often, it is easier to get financing for a lower priced machine than for a costlier machine with similar applications. For example, the Mahindra RoadMaster motor grader provides the same quality of work at less than half the cost of traditional motor graders in India. Getting finance for such cost-effective machines is a breeze compared to getting financed for a larger, traditional motor grader.

You can also look at multi-purpose machines to replace multiple single-purpose machines at your project site. For example, the backhoe loader can perform the tasks of an excavator as well as a wheel loader. What’s more, backhoe loader is also cheaper than both the excavator and the wheel loader. However, you should take into consideration the amount of workload at your site before making such a decision.

5.Choose the right financier. While you should apply to multiple financiers, make sure before you apply for financing at a particular financier, that the financier is credible with a solid reputation. Getting involved with shady financing organisations can be extremely risky. That said, check what kind of benefits financiers are offering. Some financiers offer a ‘no guarantor, no collateral’ loan, some have a pre-approved loan facility, some may offer a moratorium period.