Farmers usually require a wide range of equipment in their day-to-day operations. The equipment needs of crop farmers differ from those of livestock farmers. If you are a farmer, you will need affordable financing for the different types of equipment. This is because farm equipment is usually costly. Since profit margins on farms are always reducing, farmers need to explore innovative ways of farming to reduce their costs as this will boost their margins. One of the best options for cutting costs while boosting production is using hi-tech farm machinery. If you are a farmer, it is crucial you visit agricultural shows and farm machinery exhibitions to learn more about the new technologies being employed not just in the country, but also all over the world. If you identify a piece of equipment that will take your farming business to the next level, look for companies like Equipment Loans Online.
How Equipment Financing Works
The first thing you need to do before applying for equipment financing is identify the right equipment for your business. Secondly, you have to identify the right vendor. After all, you may find the right equipment, but the vendor has quoted an unreasonably high price for it. Therefore, you will need to look for a different vendor with a more reasonable offer price. It is always advisable to negotiate the price before you negotiate the terms of the sale.
In many cases, you will need to pay a deposit to secure equipment financing. The deposit is paid to the vendor before the sale agreement is signed. This can be anything from 5% to 20% of the value of the equipment. Depending on your credit rating, the lender can demand a bigger or smaller down payment. When looking to buy equipment, make sure you set aside at least 10% of the equipment price.
Nowadays, it is possible to apply for equipment financing online regardless of the value of the equipment. You only need to visit the website of the preferred financier, open the loan application page, fill in the details, upload the necessary documents and click submit or apply. The financier or lender will take a couple of hours or days to process the application before approving it and paying the outstanding balance to the vendor of the farm equipment in question.
Usually, financiers require payment receipts for the deposit as well as a copy of the sale agreement and copies of ownership documents of the equipment. Obviously the personal and contact details of the applicant must also be submitted.
The beauty of equipment financing is that ownership and possession of the equipment is immediately transferred to the client once the outstanding balance of the purchase price is paid. However, the financier will put a lien on the title as security for the loan. It is only after the loan has been fully serviced that the lien can be removed. This means that the farmer can use the equipment on their farm, lease it out to other farmers and enjoy full ownership rights provided they service the loan without default. In case of default, the financier may initiate recovery proceedings to repossess the equipment for auctioning and settlement of the outstanding balance. Therefore, farmers need to service their equipment loans without fail to avoid losing ownership of financed equipment.
New vs Used Equipment Financing
As noted earlier, new farm equipment cost a lot of money. The cheaper alternative is to procure used equipment. There are many used farming equipment on sale, so you can look for the perfect equipment for your needs. While used equipment may be cheaper than new equipment, their cost is still beyond the reach of many farmers, so equipment financing is still needed. Even if a farmer can afford to buy a piece of equipment on cash basis, there are better ways to spend capital. For instance, leasing extra acres of land to farm on is a better idea than using the money to acquire equipment. Farmers can generate more income by utilizing capital efficiently, and one way to do that is to use equipment financing.
Choosing an Equipment Finance Company
There are many farm equipment financiers around the country, but they are not all the same. When looking for the best financier, there are several important factors of consideration, including:
i) Down Payment
Most firms will demand a deposit. This can differ from borrower to borrower as well as from one lender to the next. Be sure to compare the deposits required by different financiers before you make a decision.
ii) Interest Rates
The cost of borrowing is a key factor of consideration. You need a low interest equipment loan, so you have to compare interest rates before you commit yourself.
iii) Processing Speed
When you need equipment fast, you have to compare processing speeds. The faster a lender can approve your application, the better.
iv) Quality of Customer Service
The ideal financier should have plenty of experience with farm equipment financing. This is crucial because you want to have a great experience applying for financing. Therefore, you may want to compare experiences and do some research on the quality of customer service offered by a firm before you make a decision.
v) Processing Fees
Most financiers and lenders usually charge processing fees, negotiation fees and equipment appraisal fees among other charges. Be sure to compare these charges before you make a decision. Firms with the lowest upfront charges and zero hidden costs should get special consideration.