Machinery finance companies come in three broad kinds: banks, the captive finance arms of machine makers, and independent equipment lenders. This article prices one invented automatic nailing machine for an Obion County, TN pallet plant from each, then looks at a used resaw, a forklift and the setup costs around a machine.
Three invented quotes on one $148,000 nailing machine, a used resaw on a term matched to its remaining years, a forklift as its own note, and blades, jigs, freight and setup added to the loan. Dollar figures are invented.
Machinery Finance Companies by Type: Three Quotes for One Automatic Nailing Machine
The same machine can come with three very different offers. The smallest monthly payment does not have to mean the smallest total once the down payment and the number of payments are counted.
| Source | Down payment | Rate | Term | Monthly payment | Total paid with down payment |
|---|---|---|---|---|---|
| Bank | $29,600 | 8.6% | 60 months | $2,434.87 | $175,692.20 |
| Machine maker's captive finance arm | $14,800 | 7.9% | 48 months | $3,245.55 | $170,586.40 |
| Independent equipment lender | $0 | 10.25% | 72 months | $2,760.52 | $198,757.44 |
In these invented quotes, the independent lender asks for nothing down, and its $2,760.52 payment is the smallest of the three, but the plant pays $198,757.44 in all. The captive arm at 7.9% over 48 months has the highest payment, $3,245.55, and the smallest total, $170,586.40. The bank sits between them at $175,692.20.
Which one fits depends on cash on hand for the down payment and on the payment the plant can carry each month.
Side by side in these invented quotes, the independent lender's total is $28,171.04 larger than the captive arm's. That is what the plant gives up by keeping the captive arm's $14,800 down payment in the bank and taking the smaller monthly figure. A plant that expects to buy a second nailer may also ask each source how a later machine would be handled.
Used Equipment Financing for a Resaw: Matching the Term to the Machine's Remaining Years
A used band resaw can do the same work as a new one for a fraction of the price, but its remaining working life is shorter, and a lender may set the term to match. An inspection or an appraisal may be part of the process.
In this invented example, a used resaw costs $38,000. Over 48 months at 10.7%, the resaw costs $976.60 a month and $46,876.80 overall, $8,876.80 of which is interest.
If the seller is another plant rather than a dealer, a lien search and a bill of sale can show the machine is clear to sell. The equipment financing page has the general terms.
Before a lender sees the resaw, the plant can gather what supports its value: the maker, model and year, service records if the seller kept them, the meter reading where the saw has one, and photos of the saw running. A used machine with a paper history gives a lender more to go on than one without.
Forklift Financing as Its Own Smaller Note
A forklift moves pallets from the line to the yard, and it can sit on a smaller loan of its own instead of being folded into the nailer note.
In this invented example, a forklift costs $31,500. Financed at 9.85% over 48 months, it carries a payment of $796.65; 48 payments come to $38,239.20, with $6,739.20 of interest.
A separate note means the forklift can be paid off, sold or traded without touching the larger machine loan.
The forklift also wears on its own schedule. It can run across every shift, between the line, the yard and the trailers, and its tires, mast and battery or engine age at a different pace from the nailer. A term set to the forklift's own working life keeps the plant from still paying for a truck it has already replaced.
Blades, Jigs, Freight and Setup: Costs a Lender May Roll Into the Machine Loan
A machine rarely arrives ready to run. Around the nailer, the plant in this example lists these costs:
- Saw blades and spare heads: $4,200
- Nailing jigs for two pallet sizes: $2,600
- Freight: $3,100
- Vendor's setup and operator training: $1,900
Together these invented costs add $11,800. Rolled into the bank quote (the same $29,600 down, 8.6%, 60 months), they raise the payment from $2,434.87 to $2,677.53.
Pricing training, freight and setup on separate lines also helps later. If the plant adds a second nailer, it can see which costs repeat, such as blades and freight, and which were one-time, such as the first round of operator training.
Whether a lender includes them is the lender's call; a quote that lists them apart from the machine price makes that easy to decide. Plant figures for Obion County, TN are on the manufacturing page. A term loan can carry costs no lien covers, and inventory financing suits raw lumber. The other articles cover other trades.
By Larkwood Lenders · Updated
