A construction equipment loan is a specialised form of financing that is designed to help businesses in the construction industry acquire the necessary machinery and equipment for their projects. This loan helps construction companies get access to funds for purchasing or leasing excavators, bulldozers, cranes, and other essential construction tools.
Heavy equipment loans are tailored to the needs and financial circumstances of businesses. It offers financing of 95% - 100% of the equipment loan at flexible repayment terms and attractive interest rates.
The interest rates offered for construction equipment loans vary among different lenders and are influenced by certain factors such as the borrower’s creditworthiness, the loan amount, repayment terms, and prevailing market conditions.
If you are seeking heavy equipment financing, you should carefully review and compare interest rates offered by different lenders. This will help you ensure a cost-effective financing solution that aligns with your financial obligations. Below is a table of lenders offering construction equipment loans along with the interest rates:
|HDB Financial Services
|5.00% - 36.00% p.a.
|9.00% - 17.00% p.a.
|8.50% - 16.00% p.a.
|IDFC First Bank
|7.50% - 30.00% p.a.
|9.75% - 25.00% p.a.
|9.75% - 10.75% p.a.
|9.55% - 16.75% p.a.
|Kotak Mahindra Bank
|9.00% - 24.00% p.a.
|18.50% - 22.50% p.a.
The eligibility requirements for heavy machinery loans determine the qualifications that businesses must meet. These requirements will differ depending on the lenders. Below is a general overview of the eligibility criteria set by most construction equipment lenders:
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An equated monthly installment (EMI) calculator is a valuable tool that can simplify the planning process for businesses looking to acquire machinery. The calculator helps businesses estimate their monthly repayment obligations based on the loan amount, interest rate, and tenure.
|Loan Paid to Date (%)
You can also manually calculate the EMI using the formula EMI=P x r x (1+r)n(1+r)n- 1
EMI = equated monthly installment.
P = Principal loan amount.
r = interest rate
n = loan tenure
The application for construction equipment loans require a set of essential documents that assure lenders of your credibility. Specific requirements will differ from lender to lender, however, below is a list of documents that lenders expect:
1. New Equipment Financing
This type of financing offers financial aid for the purchase of new construction equipment or machinery that is essential for business operations. This loan type can be availed by businesses that purchase only new equipment.
The loan may be secured, where the purchased equipment will be taken as collateral. The repayment structure for the loan will also be structured to match the expected lifespan of the equipment.
2. Used Equipment Financing
Used equipment financing is a financial arrangement where construction companies get the necessary funding to purchase a second-hand equipment, machinery or technology that is required for their business operation. This is specially designed for businesses looking for a cost-effective way to acquire equipment without paying the full expense of purchasing new equipment.
3. Equipment Leasing
This type of construction equipment loan allows businesses to access necessary assets by renting equipment for a specified period, rather than purchasing. It is a cost-effective method that is useful for businesses that need certain equipment for a short-term period. It can also be used by companies who want to try out a product or machinery before purchasing it. Businesses also have the option to purchase the equipment once the lease term is over.
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The equipment eligible for heavy equipment financing often extends to a diverse range of machinery and tools necessary for construction projects across various industries. Here is a list of the various types of equipments that businesses can get:
|Articulated Wheel Loaders
|Hot Mix Plants
Getting a heavy equipment loan is a great financing option for businesses in the construction sector. It provides them the flexibility to acquire or upgrade their machinery which contributes to enhanced efficiency and productivity on construction sites. Here are the numerous benefits of choosing a construction equipment loan:
Applying for a construction equipment loan has been made easy with the availability of many lenders offering online applications. Here are the steps to apply for a heavy equipment loan:
Step 1:Choose your lender: After choosing your preferred lender that caters to your financial needs, visit their website and apply for a construction equipment loan
Step 2:Fill the application form: Fill in the form with all the correct information including the loan amount and preferred tenure.
Step 3: Submit the form along with all the necessary documents asked by the lender. Specific documents will differ depending on different lenders.
Step 4: After the form submission the lender will conduct a credit check on your profile.
Step 5:: Upon approval you can review the loan terms offered by the lender and negotiate for better terms if necessary.
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The repayment options provided by construction equipment lenders is designed to provide flexibility and align with the financial circumstances of businesses in the construction industry. Below are some of the common repayment options offered by various lenders:
The types of equipment that can be financed with a heavy equipment loan are Excavators, cranes, forklifts, motor graders, loaders, dump trucks, bulldozers, concrete equipment, drills, crushers, etc.
All Indian citizens, Partnership firms, Proprietorship, Private limited companies, Public limited companies, HUF, Trusts, Societies and OPCs are eligible for a heavy equipment financing.
A construction equipment loan offers asset acquisition, working capital preservation, tax benefits, flexible repayments and more.
A construction equipment loan can be repaid in 12 to 60 months with some lenders offering repayment terms up to 8 years.
The equipment bought can be taken as the collateral for the construction equipment loan.
Yes there are tax benefits on the interest paid for businesses with a construction equipment loan.
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