When it comes to financing equipment in the transportation sector, several misconceptions can cloud judgment and lead to suboptimal decisions, impacting your bottom line. These misconceptions often deter businesses from exploring financing options that could be highly beneficial. Understanding the realities is crucial for making informed decisions that align with business goals and financial strategies.
Stephen Denlow, National Sales Lead Transport at DLL sat down with ATN to debunk some of the most common myths surrounding equipment financing in the transportation industry – from the assets financed to the true cost of financing options. By dispelling these myths, transportation businesses can better leverage financing options to support their growth and operational efficiency.
Myth 1: “Financiers will only look to finance certain transportation asset types.”
Reality: At DLL, all transportation asset types can be considered for funding, including electric vehicle (EV) charging equipment and other sustainable solutions. This flexibility helps businesses invest in the latest technology and infrastructure to support sustainability goals.
Stephen shares, “The transportation industry evolves rapidly, and so are the types of assets that businesses need to stay competitive. Whether it’s traditional fleet vehicles, EV charging stations, or advanced telematics systems, DLL is able to provide flexible financing solutions that cater to a wide range of asset types. Not just limited to internal combustion engine vehicles. This means that we not only support the adoption of more sustainable technologies but also ensure that transportation businesses can invest in the latest innovations without being constrained by outdated financing models.”
Myth 2: “The finance option with the cheapest term payment is always the best choice when financing transportation assets.”
Reality: Always look beyond the monthly payment and evaluate the total cost of ownership (TCO). While lower-term payments might seem attractive, it’s crucial to consider the costs at the end of the rental period and any additional fees that may apply. In the transportation industry, unexpected costs can arise, such as maintenance fees, monthly account keeping fees, administration fees, end-of-term charges, and other hidden costs. Transparency from financiers is essential to anticipate these costs accurately – understanding all obligations and potential financial impacts is key to making an informed decision.
“Choosing between a lease and a loan can greatly affect the total cost of ownership and the flexibility of your financing structure”, Stephen adds. “It helps to take all of these factors into account so transportation businesses can ensure they select the financing option that aligns with their operational needs and financial goals best.”
Myth 3: “Financing is only for businesses that can’t afford to buy.”
Reality: Businesses of all sizes use financing to maintain liquidity while still investing in growth. Financing is a strategic tool used by transportation businesses to manage cash flow effectively. It allows companies to keep their cash available for other investments, such as expanding the fleet, marketing, or developing new services. Asset finance is a key part of many businesses’ financial strategies, providing flexibility and control over cash flow, as well as the ability to acquire essential equipment or technology without tying up capital in depreciating assets.
“It’s important to understand financing isn’t a lifeline for struggling businesses,” notes Stephen. “In fact, many companies use it as an integral part of their financial strategy. This approach enables them to stay agile and responsive in a competitive marketplace.”
Myth 4: “You lose control over assets when you finance.”
Reality: “Financing does not mean losing control of your assets. With the right structure and with the support of experienced professionals, you can maintain control while optimising your assets’ performance.
Digital tools also help transportation businesses leverage the best possible use of finance. These tools provide transparency and management capabilities that help you remain in control of your financed assets,” states Stephen.
Unlock the true potential of equipment financing
Understanding the realities behind common equipment financing myths is essential for making informed and strategic financial decisions. With Stephen’s insights, transportation businesses can better leverage financing options to maintain liquidity, manage cash flow effectively, and invest in growth opportunities without tying up capital in depreciating assets.
Whether it’s realising financing is a strategic tool for all businesses or evaluating the total cost of ownership beyond just the monthly payments, transportation businesses can make smarter financial decisions that align with their goals and enhance operational efficiency. Embracing the true benefits of equipment financing can ultimately support your business’s growth and success in a competitive marketplace.
DLL understands the unique requirements of our partners worldwide, offering proven solutions that empower transportation businesses to thrive. To learn more about how DLL can support your business during this transition, click here.
Disclaimer: Finance is provided by De Lage Landen Pty Limited (ABN 20 101 692 040) (DLL). Equipment to be used for business purposes only. Subject to DLL’s standard credit criteria, fees and terms and conditions apply.
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