The first is rates. I’m not a fortune teller, but I have been pretty spot-on with my rate predictions over the past three years. And currently, we seem to be at a crossroads. After a year-plus of large hikes, then a few rounds of small cuts, things have leveled off. The truth is, we’re not likely to see any more cuts for the foreseeable future. In fact, depending on how things shake out the next few months, we could even see another hike before we see another cut. 

Basically, what I am saying is today’s rate is likely going to be your rate for quite some time. And with a fairly uncertain world economy right now, locking in a fixed rate on something you need is a smart thing to do.

Second reason: Used equipment inventories are bursting at the seams. Every single pre-owned equipment dealer and auction house we talk to has seen their used equipment inventories swell over the last few quarters, and they are looking to pare down. There are several economic reasons for this that go all the way back to the pandemic and supply chains, but the fact is right now, the glut of used equipment available is unsustainable for dealers. 

What this means for business owners is there are some fantastic deals on all manner of used equipment – used vehicles and used machinery in particular.  If you have a need for something, definitely consider a used model – you will likely be pleasantly surprised at the value you can get. And yes, you can finance used equipment and lock in a great rate right now. 

I always say it’s a good time to finance equipment (because it is), but right now, Q1 2025, things are especially attractive, and business owners should take advantage.   

Used heavy equipment financing is something Crest Capital has done for more than 30 years and remains one of our core offerings. We finance heavy equipment for both equipment purchased from a dealer, and we also finance private party used heavy equipment sales. In some cases, we even financed a piece of equipment when a company bought it new, then six years later financed the used sale for the new owner.

One big reason used heavy equipment is a robust industry is that most pieces of heavy equipment are not as impacted by technology as much as other types of equipment. Of course I’m not saying advances have not been made – today’s heavy equipment offerings are definitely better than yesterday’s – but the advantages may not be immediately noticeable, especially when it comes to the core work. An older backhoe can generally hold its own against a newer model for most backhoe-related functions. An older dump truck can still do what a dump truck is supposed to do – hold and dump its cargo. The interior, engine, and creature comforts may differ radically, but the “hold and dump” parts will be similar. A profitable, growing construction company can certainly find use for a used dump truck.    

There’s almost nothing I like better than talking to someone about financing used heavy equipment. I like construction people in general, and there’s always some excitement in the air when a used backhoe, dump truck, skid steer, or similar is changing hands. And I enjoy it when businesses are happy about getting new-to-them equipment and seeing a profitable future.

If you’re in the construction industry, you can probably look back and feel an affinity for a certain piece of heavy equipment you no longer have. It may not be today’s shiny new model, but I’ll bet you’d like to operate it one more time!

The reason he was elated is because this type of transaction is typically an instant reject from most equipment financing companies. Most lenders – the bank included – simply do not like private party equipment financing deals. This includes machinery and other equipment, business vehicles, furniture, and similar. It doesn’t really matter what the equipment is – most lenders want to see a manufacturer or an authorized dealer as the seller.

Conversely, while Crest Capital looks at deals with a discerning eye, that eye is attached to a person, and we will consider private party equipment financing deals. It’s actually a pretty large differentiator in our industry, and allows us to stand alone. 

Now for the obvious question: “why don’t most equipment financing companies like private party deals?”

It’s simply an answer of both risk (to the borrower) and work (for the lender). And this risk and work involves ownership of the equipment and past liens. I have written about this previously in a post called What Is PMSI, and Why Is It Important in Equipment Financing?, which goes over the basic details. In short, it’s a tricky subject with a lot of moving parts and no guarantees, which is why I am reluctant to say anything definitive about it. 

But I can say that part of what makes an “authorized dealer” an authorized dealer is they generally do the legwork on UCC and title issues. This gives the buyer a bit of recourse in case the item has an old lien that nobody knew about or didn’t mention (and old liens happen more than you think.) Since the buyer can actually lose equipment that has an old lien (while still owing the lender money), a dealer will usually step up and take care of the buyer. Private sellers… not so much.

As I stated, Crest Capital is the only lender we know of that entertains financing equipment from private party sellers. But these types of deals do require a little more legwork and time (note: it helps immensely if the seller is the original owner and has all the paperwork.)  And not all of them are going to be approved. 

This all stated, if you do find a nice piece of equipment, the paperwork is there, and the private party seller is the original owner (or the line of ownership can be easily traced), bring us the deal. No promises but we’ll at least take a look! 

It makes more sense than ever to take advantage of Section 179. All you have to do is read my past few blog posts – there you find talk of rate increases, record inflation, increased lead times, and even used equipment costing more. 

All of these things mean a company has more overhead. Yes, the cost of doing business always seems to go up no matter what industry you are in, but right now, the increase is abnormal. So this makes Section 179 more important than ever.

It helps greatly that Section 179 got a robust increase in 2022 – $1,080,000 – that’s up 30k from 2021. But even if you never approach those limits, deducting the full cost of eligible new (or used) equipment is extremely beneficial.

Quick math: at a 35% tax rate, writing off a $50,000 piece of equipment will save you $17,500 in taxes. These are real dollars that stay in your bank account.

Ok, now let’s talk financing. When you finance equipment and take a Section 179 deduction, it’s extremely beneficial to your bottom line. Let’s look at this more in-depth using our $17,500 number.

Say you financed that $50k piece of equipment. Let’s assume a monthly payment of $950. You take that $17,500 you are saving, and divide it by $950… that gives us 18.4… that’s how many months your tax savings will pay your loan payment.

In other words, just because you took the Section 179 deduction, you are literally using that financed equipment for free for the first 18 and a half months of the loan.  And hopefully you are using that equipment to make MORE revenue, so it’s a win all around. 

Section 179 and equipment financing is extremely powerful. But it has never been as important as it is here in 2022. Make sure you take advantage of it. 

I’m pretty sure you have noticed how the marketplace has changed over the past two years. Supplies are short, and waiting times for needed equipment have increased. 

This “shortage of equipment” has led to an increase in used equipment purchases. Many companies who never considered buying used equipment before are now moving in that direction. 

This has done three things to used equipment:

The first is, it has made used equipment quite necessary to many companies. Depending on the type of equipment or vehicle needed, many times a used model is the only choice. 

The second thing it has done is make used equipment scarce. We even heard of a business owner driving all night to be first in line to get a choice piece of used construction equipment. There were a few disappointed people behind him… 

The third thing is used equipment is now quite valuable, with high quality, gently-used models going for a sometimes higher-than-normal price.

So What Are Crest Capital’s Reasons to Finance Used Equipment in 2022?

As I mentioned in the beginning, we give our customers some distinct advantages when it comes to financing used equipment.

The first is our great rates. In fact, our rates are the same for used equipment as they are for new. This is a major departure from almost every other business lender out there. Because of scarcity, you will pay more for a piece of used equipment than you did two years ago, so it’s beneficial to have a lender who can cut you a break on the rate, huh? 

The second is our speed. Since used equipment can get snatched up fast, the last thing you need is your lender dragging their feet. We don’t – we move fast, so you can get what you need when you need it.  

Thirdly, we will finance soft costs. This is very important with used equipment, as warranties and maintenance agreements are smart purchases with used equipment. In fact, a full 25% of your used equipment loan can be soft costs, so feel free to also finance the warranty, taxes, delivery, etc. 

Used equipment matters in 2022, and financing it makes a ton of sense. If you’ve even remotely thought about it, take a look at how much a used equipment monthly payment will be, and let us know if we can make it happen.