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5 Lies Heavy Equipment Finance Companies Tell You

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So you’ve found yourself needing to finance heavy equipment. No matter the scope of the project, you’re probably wondering how to find a company you can trust. Many people will take out a contract with a company, put down a deposit, and then find out that the terms for their truck loans have changed.

Lies Heavy Equipment Finance Companies Tell You

If you know what red flags to watch out for, you can avoid being sucked into one of these schemes. It’s common for people to pass a credit check, sign a contract, pay their deposit, and then be told by the financing company, “Actually, it’s going to be more money than we originally told you.”

By this time, you’ve already chosen your equipment, and you don’t have the time or money to look for another company. So you just take the bad deal and move on.

To avoid this scenario, you should always be aware of the real numbers at play. Here are 5 things that a financing company may tell you that simply aren’t true.

  1. You can finance your heavy equipment at rates of 5.5%

    If it sounds too good to be true, it probably is. A number of leasing companies will say that they finance heavy equipment at around 5%, but this isn’t often the real rate. A good way to check is by Googling “reviews of [company name].” Almost every time, you’ll be greeted with reviews of people saying that the financing rate was a lie.

    In very uncommon cases, you might indeed get 4% rates. But when this is the case, you could just go to your dealer and get zero percent financing. If you’ve been in business for a number of years, and you have good credit, you might see true rates of 5% or 6%.

    Financing companies will create misleading ads. They make the ad seem like all heavy equipment financing is done at a rate of 5%. What they actually mean is that 5% is the lowest possible rate you might get, while the rest of the rates go much higher than that.

  2. You can pay a lease of $2,600 per month for $100,000 worth of equipment.

    You’ll hear this rate quoted on numerous different websites. You can even search for equipment leasing calculators and input these numbers into them. Most often, they’ll give you a potential payment that’s around $2,600 per month.

    This isn’t true. Like the first scenario, it’s true that some people can lease the equipment for $2,600 a month. But this rate is very rare in comparison to the rest of the company’s rates. A quote of $2,600 is the absolute least a person might expect to pay; but it isn’t even close to the average payments.

    Companies quote the lowest possible rates, but they know that most people who finance with them won’t qualify for those rates. They hope to mislead people into signing contracts before they realize that their rate is different than advertised.

  3. At the end of the contract, you own the equipment… or do you?

    This is a fairly common occurrence in the industry, even though it seems like it shouldn’t be. A company will give you a quote for a lease payment. This payment will be around 10% of the equipment’s total value. Sometimes, if you’ve been leasing the equipment for a particularly long time, the payment will be even greater than 10%.

    To get you to continue the process, they’ll say that you’re signing a contract which allows you to own the equipment when the lease is up, and all you have to do is make a $1 payment.

    A person might tell you that it’s a $1 buyout and hope that you trust them enough not to read the contract. In other circumstances, the original contract might include a $1 buyout, but it could be changed during the execution.

    When companies do this, it’s easy to find complaints about them online. Double-check the claims of all the companies you negotiate with. If they have a lot of online complaints, don’t trust them. And always make sure that you read the contract before you sign anything.

  4. Your contract doesn’t roll over

    Sometimes, companies will hide a clause in the contract that states as long as you don’t notify them through the mail, the contract will automatically roll over into next year. Oftentimes, the mail correspondence will need to be received within a certain time frame — a starting date and an ending date.

    When you sign a true lease, it makes sense to have a rollover. But this kind of hidden clause pairs with the $1 buyout lies. If you have a contract to pay $3,000 for one month, the yearly rollover will make you pay $36,000 even though you have no intention of using the equipment for that time.

    Companies that engage in these scams tend to have public reviews denouncing them. You can look into official records on Leasing News, as well as read up on the reviews of the companies’ business practices.

  5. It’s always better to lease than to rent

    This is another bit of “wisdom” that simply isn’t true. It isn’t always better to lease. The option that’s best will vary depending on what kind of rental you’re planning on getting. You’ll also need to understand the terms of any available rental purchase option, otherwise known as an RPO. Sometimes, a dealer’s RPO will be so good for the person renting that the renter’s finances will be much better if they wait to buy until after the RPO term.

    It is true that in most cases, you’ll have a more economically sound option if you lease. Alternatively, you might get a heavy equipment financing loan from the bank. But you should be aware that leasing isn’t always the best option.

    For more information about truck loans, call Truck Loan Center at 1-866-230-0094 or contact us here.

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