One big advantage of equipment financing is some equipment financing companies will offer to finance more than the equipment. In fact, I would go as far to say that when shopping for an equipment lease or such, choose a company that will finance soft costs / add-ons over and above the cost of equipment.
Why is this important? Because it allows you to get the add-ons that can truly make a difference, and also (of course) preserve your cash reserves. It makes for a very clean, complete borrowing process.
So what kinds of add-ons count as “over and above”? Here’s a very incomplete list (I say incomplete because every industry has specific add-ons and extras that make their equipment more useful).
- Taxes
- Delivery Charges
- Installation Charges
Let me stop here really quick as these are not all that industry specific. Yes, not everything needs to be delivered and/or installed, but most equipment, especially anything large, will have these options. And, as mentioned, some equipment finance companies will finance these.
Ok, let’s continue:
- Maintenance Agreements – These can be a lifesaver for many pieces of equipment, especially if it’s complicated, high-tech equipment.
- Training – Many new pieces of equipment need some kind of training. Some comes with documentation and/or videos to help train people, but others may require a visit from a trainer (or have your people go to a training class.) Either way, this can be financed along with the equipment. And yes, this applies to financing software as well.
- Optional Add-Ons – Towing packages for work trucks… heavy duty suspension for box trucks… conveyor feed system for a garbage baler… accounting modules for ERP systems… these all can fall under optional add-ons. Many types of equipment will have options that are not actually a piece of the equipment. And the bank may balk at these, but not your friendly equipment financing company!
Financing equipment is always advantageous, for a hundred different reasons. And financing add-ons and soft costs are just one of them.