It's your choice whether to return the equipment or keep it and make a balloon payment
In most cases, it's your choice how the transaction is structured.
Some of our customers like to know they'll own the equipment after X years.
On the other hand, your accountant may tell you that a "true lease" is the smarter option. A true lease means that you'll have to pay the equipment's fair market value (FMV) at the end to keep the equipment.
True leases have two advantages:
Your payments will be lower
In a true lease, you can write off your entire payment
Leasing isn't the best choice for everybody.
Here's one disadvantage:
You can pay off most bank loans at any time without prepayment penalties. Most leases, however, are set up so that you owe the entire payment stream of the lease.
Note: Here's something to be careful of when you're shopping for crane leasing.
Some unscrupulous leasing companies may tell you there is "no prepayment penalty. While technically true, what can be omitted is when there isn't any advantage to paying the lease early either...
Leasing has many advantages over your bank, though...
Will You Qualify to Finance a Crane?
Financing for a crane is less cut-and-dry than for more inexpensive types of construction equipment.
For example, imagine someone financing a $20,000 skid steer. If someone has good credit, or a little bit of collateral, the answer is almost always yes.
When you want to borrow hundreds of thousands of dollars, however, there will be some questions beyond "how high is your FICO score?"
Some important questions will be:
Is your company's cash flow sufficient to make the payments?
Does your company have enough cash on hand to weather a bad month or two?
How has your company performed historically?
Luckily, compared to a lot of other types of equipment, cranes hold their value pretty well.
This means that it is easier to finance a crane than many other types of equipment.
(It also means that leasing older equipment is usually not a problem).
We do often get inquiries from folks trying to start a business with zero money, bad credit and no collateral.
So, that's not gonna fly...
In most reasonable cases, however, we find there can a way to get you the financing you need.
What are the Payments on a Crane?
If you've been looking on the internet for crane financing you may have come across some "calculators" that show you what your payment might be.