Typically, heavy equipment has a long-life expectancy and commands good resale values. Let’s look at an example of a three-year £250,000 lease for some computer equipment compared to heavy equipment. At the end of the three-year term, the computer equipment may have a value of £25,000, if you are lucky. With heavy equipment, the asset value after three years may well be £200,000. In some instances, if there is a long waiting list, the value might even be higher.
Leasing companies will charge a much lower rate of interest for heavy equipment as the financial risk in event of default is much lower. Saying that, we have seen an example of heavy equipment used to move coal underground. If this equipment has to be reposed, the value will be a lot lower. They will have to de-install the equipment and find a buyer of highly specialised equipment. Not as easy as selling a secondhand dumper truck above the ground.
In summary, you have to be careful when using a heavy equipment leasing calculator. The interest rates will be very cheap, but you/we need to understand if there is any residual value placed in the equipment.