Helping construction and earthmoving businesses finance the equipment they need

Leasing offers a number of benefits over purchasing outright:

• It allows you to access more equipment than you could afford to buy outright. For example, $1 spent on buying equipment outright is equivalent to approximately $5.56 of buying power with a lease. In other words, you can buy 5.56 times the amount of equipment for the same cost.
  
  
• It allows you to break down a large upfront cost into smaller monthly payments, in a way which matches your cash flow.
  
• Rental and operating leases are tax deductible, and the deductions you receive are generally larger than claims for depreciation on new equipment. And if you purchase second hand equipment, depreciation benefits may be negligible if they have already been claimed by the original owner.

• Construction companies often have large sums flowing in and out, so paying cash for construction equipment when there is cash in the bank is tempting. Nonetheless, it is often not the best solution from a capital management perspective. This is because some things can’t be financed, like wages, fuel and general business expenses, so keeping your cash so you have a buffer in the bank can help you manage when unforeseen expenses arise.
  
  
• If you use equipment heavily then it may not be worth a great deal at the end of its useful life. If you own it outright you will have the headache not only of repairs and maintenance, but of trying to dispose of the equipment. If you lease equipment, you simply return it at the end of the lease and Eclipx takes care of the rest.

For contract-based equipment, ideally the term of your finance should finish at the same time, or before your contract ends, so you are not stuck with equipment you are paying for but not using.

For equipment you use all the time, the term of your finance should match the useful life of your equipment. If you will use equipment for the long-term, then you would normally structure the lease differently compared with project-based work.

If the answer is yes, or even maybe, then don’t lock yourself into a contract with no flexibility. A rental or operating lease provides flexibility for you to return equipment or to upgrade it when you need to.

Bank interest rates can be very attractive. On the other hand, understanding what you are being offered exactly, and what collateral you are expected to provide for a loan is of vital important. 

Many bank loans will require that you put your home up as collateral for a business loan or for asset finance. This can be tempting, particularly if by doing so you can secure a lower interest rate. However, it is not a good idea to mix your personal and business asset, because if your business experiences difficulties, you may be risking your home as well.

Eclipx Commercial products are unsecured, meaning that if you run into difficulties or even default on payments, all we take is the equipment.