“New and used chippers can be financed, although rates and terms can differ greatly between the two and will depend on the financing partner selected.”
ment; however it is limited to a certain number of hours per year. “Three- and five-year leases are becoming more popular, especially now when prices are inflated,” says Labriola. “Leasing makes the buyout worth what you paid up front during the leasing period.” “The lease structure can be very similar to a consumer-vehicle leasing, including lower payments compared to financing payments along with a residual value due at the end of lease term,” says Craig Colling, senior vice president of sales for Ascentium Capital. “Like vehicle leasing, at the end of lease term, the customer has the option to purchase the equipment, re- turn the equipment to the lender, or con- tinue leasing for typically 12 months.”
the borrower’s business credit, time in business, and may potentially review the personal credit of the own- ers and officers. A company’s annu- al revenue and cash flow, reviewed through their financial statements and/or bank statements, may be re- quested depending on the amount be- ing financed and the credit quality of the borrower,” advises Colling. “For transactions under $150,000, many lenders do not trouble the borrower
financing company will also complete a lien search on the seller. It’s not the end of the transaction if there is a lien; there’s just some extra paperwork to secure the loan. This protects both us and our customer from the possibili- ty of the machine being repossessed by the seller’s original bank.” By and large, it can be difficult to assess the health of a used machine, leaving buy- ers to trust that the seller has complet- ed the maintenance per the schedule.
All the finance experts con- sulted recommend working with your lender to under- stand all the financing and lease options available to you. “End-of-lease options can vary greatly from an open-ended residual, which could equate to paying 30- 50% of the original equip- ment value, to paying as lit- tle as $1.00 to purchase the asset at the end of the lease term,” suggests Colling. Leasing affords a tree care company all the benefits of using a new
Some finance companies may even require a site inspection as opposed to remote valuation. Whether new or used, a chipper is a big invest- ment and is poised to help grow a business. Doing research will go a long way in ensuring the right purchase decision. “When a company is looking to buy a chipper, there are several avenues to get information on the machines,” says Morey. “If you haven’t run a
for financial statements and focus on business and personal credit factors alone.” Many finance companies are doing more private-party sales than in past years, although it’s worth noting that they might not flow as nicely as a deal- er sale for new or used equipment. “We do a valuation of the equipment which includes photos and a one- page condition report filled out by the seller. Our asset team will then go to the market to validate fairness of the asking price,” says Schuman. “A good When a company is looking to buy a chipper, there are several avenues to get information on the machines. Request a demo so you can see what it’s capable of doing. It will eliminate surprises. Photo courtesy of Bandit.
machine, including a warranty, with the possibility to give it back at the end of the leasing term to get into another new machine or walk away entirely. Alternatively, owners can buy the machine they’ve leased, and a benefit of that is knowing how the machine was cared for during the lease period.
chipper, request a demo so you can see what it’s capable of doing. It will elimi- nate surprises.” Colling advises, “Just like when you shop equipment suppliers to acquire a chipper, you should take the same approach with your financing source. Even if the equipment dealer refers you to a specific lending partner, you should still get one or two additional equipment finance bids to understand loan and lease term length, down pay- ment requirement, cost of capital, end of lease buy-out options and pre-pay- ment penalty policy. Comparing three lenders will ensure you’re getting the best chipper for the best price, with the right financing solution to meet your business needs.”
FINANCING A PURCHASE
New and used chippers can be financed, although rates and terms can differ great- ly between the two and will depend on the financing partner selected. Preparing to have some key paperwork handy will help the process go smoother.
For new purchases, “Lenders review
12 | ArborTIMES Winter 2023
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