Equipment purchasing. Financing or not?

[canadianclimber]

Hey, Curious on what people prefer to do when purchasing equipment in the 15k-30k ish range? Do you finance or save to buy out right? Any info or experience you want to pas along would be great.

 

[SeanKroll]

My neighbor said that if you are in a bind and want to borrow $30k, you are screwed. If you finance the equipment and get in a bind, the bank wants to keep getting payments, as able, during the bind. They don't want your chipper.


Having enough equipment that keeps going to jobs makes the money easier making payments.



Can I make $700 bucks a month more with $35k of more equipment?
Yes, but only if I'm making good decisions, choosing the right equipment and pricing right.

 

[flushcut]

Which has a better write off? Either way, I would hope, the machine is going to make money.
Borrow their money, keep your money, make a payment or two ahead so the interest rate is nonexistent, or make a payment and half extra a month pay it off sooner increase your credit score. All while you are making money.

Buy it out right, spend your money, make money to replace the money you just spent.

 

[SeanKroll]

In concerning world times, more nest egg may be better.

Interest bearing accounts or stable investments offsets interest on a loan.

 

[lumberjack]

Liquidity squeezes are a real issue to watch out for, strong liquidity is a huge and undervalued asset for a business.

Normally $15-30k gets paid out of pocket.


In February:
I financed a work pickup.
I paid for the trailer and upfitting on that truck.

In March:
I paid off the 2022 Freightliner with 17k miles.
I sold my Dino lift from last January and bought its new replacement keeping the original loan.
I bought a 730 hour Ditch Witch SK1550 and a new Ryan’s grapple.
I financed a grapple for the excavator, 0% for 12 months, no cost financing. If I can close out a few decent jobs in the next months I’ll pay it off early/don’t want to carry that payment into winter.

Last year:
Financed the Dino RXT92
Financed the MRT3060
Paid for the Morbark 2230, Rayco RG165, winch jib for the MRT, Scag Windstorm, 25T pintle trailer, 6300 sq ft barn, and whatever else.


Long story short, don’t run out of liquidity, that’s how you go bust. Don’t finance too many things at once, that’s how you build a yoke around your fragile neck.