Cranes and Yellow Goods
Equipment financing is commonly used by companies in the construction, mining, and manufacturing industries to acquire heavy equipment, including cranes and other yellow goods. Here are some ways in which equipment finance can be used for cranes and other yellow goods:
- Purchasing new or used equipment: Equipment finance can be used to purchase new or used cranes and other yellow goods. The financing can cover the full purchase price of the equipment, including any taxes, fees, or delivery costs.
- Leasing equipment: Equipment finance can also be used to lease cranes and other yellow goods. A lease may provide companies with more flexible repayment terms and the ability to upgrade to newer equipment at the end of the lease term.
- Financing upgrades or refurbishments: Companies may use equipment finance to finance upgrades or refurbishments to existing equipment. This could include retrofitting cranes with new technology, replacing worn parts, or performing routine maintenance.
- Managing cash flow: Equipment finance can be used to manage cash flow by spreading the cost of equipment over an extended period of time. This can free up capital that can be used for other business expenses, such as payroll, rent, or inventory.
- Managing risk: Equipment finance can help companies manage risk by providing them with the ability to acquire new equipment without having to tie up all their capital. By financing the equipment, companies can spread the risk of equipment ownership over time and reduce their exposure to the volatility of the equipment market.
When it comes to cranes and other yellow goods, equipment finance is often used to acquire the expensive equipment needed to keep construction projects on track. The financing terms for cranes and other yellow goods may vary depending on the specific equipment being financed, its age and condition, and the creditworthiness of the borrower. Companies that require cranes and other yellow goods for their operations should work with lenders who have experience in the construction and heavy equipment industries and can offer financing options that are tailored to their needs.
Examples of Yellow Goods and Equipment Finance:
Here is an example of equipment finance being used to finance yellow goods:
A construction company needs to purchase a new crane to complete a large-scale construction project. The crane they need costs $500,000. The company does not have the full amount in cash to purchase the crane, but they have a strong credit history and a history of successfully completing similar projects. They decide to apply for an equipment finance loan to purchase the crane.
After shopping around for the best loan terms, the company finds a lender that specializes in construction equipment financing. The lender offers the following terms:
- Loan amount: $500,000
- Loan term: 5 years
- Interest rate: 6% per year
- Repayment: Monthly
- Asset security: The crane being financed serves as collateral for the loan.
Based on these terms, the monthly repayment amount would be approximately $9,677. The interest rate of 6% per year is applied to the outstanding loan balance each month, with a portion of each payment going towards interest and the remainder going towards paying down the principal.
The crane being financed serves as collateral for the loan, which means that if the company defaults on the loan, the lender can seize the crane to recoup their losses. Assuming that the company makes all of their loan payments on time, they will retain ownership of the crane once the loan is fully repaid.
By using equipment finance to acquire the crane, the construction company can spread the cost of the equipment over a period of 5 years, which frees up cash flow for other business expenses. Additionally, the company can take advantage of the tax benefits associated with financing equipment. Overall, equipment finance provides a flexible financing option for construction companies that need to acquire expensive yellow goods like cranes to complete their projects.