To finance or not?

[Warners]

New machinery and vehicles means warranty cover which is always good and to finance a purchase means that your capital stays in the bank which again is no bad thing.

[gensetsteve]

New machinery and vehicles means warranty cover which is always good and to finance a purchase means that your capital stays in the bank which again is no bad thing.

 

To a degree I have capital in the bank but after £15,000 in an isa per year its not worth putting in the bank. No point borrowing at 8% while your money earns 0.2 may as well pay cash and save all the paper work.

[IVECOKID]

I have used the bank twice in 9 years to borrow and have no regrets for buying a 2 TON Digger and a Tracked hi tip dumper ,has long has each machine earns its keep every month then i am happy ,.

 

Digger long paid now ,

 

Ste

[Philip Anderson]

The more years you have been trading the more confident you become, if you have traded for 20 years and survived a recession, you can feel pretty confident that the phone will keep ringing.

 

So long as I can put down a decent deposit I happy to borrow against a fixed asset, if things go bad the worst thing thats gonna happen is you sell the asset and pay off the loan.

 

I agree,having been through 3 recessions,it depends on your business model there are plenty of advantages to new machinery productivity reliability etc and as you say put down a decent deposit 25%+ if things go wrong you can sell off the asset !on the plus side this asset can earn you money !open new doors or in the threads originators case get you tipping a load off instead of hand unloading which is progress.

I have hire purchased over the past 28 years with no problems spread the cost good kit good image and charge the rates to cover it!!

I must say if I had £100k sitting around in an ISA I'd use it or maybe buy to let at today's interest rates.

[scraggs]

Newer does means better. Of course you can't guarantee

you'll have work in two or three years, but that's the uncertainty of business.

 

I must be a Jonah then

One of our new Ford's spent nearly 6 weeks of it's first six months in the dealers workshop

A new Hilux ate a transfer box in the first week

And I know it's not work related but my new Triumph has been at the dealers longer than it's been in my workshop with what I have since found out is an inherent problem.

I have had other new kit that has been bad quality and needed going back to the manufacturers for repair or replacement.

So yes thinking about it perhaps I am a Jonah

[njc110381]

The newer kit has a lot more technology in it to give the extra hp and economy. But then that fine tuning is more likely to go wrong. I just don't know! Reading in my old mog manual it talks about putting kerosene and even petrol in the diesel in cold weather.... Can you imagine how a modern engine management system would react to that?!

[gensetsteve]

I agree,having been through 3 recessions,it depends on your business model there are plenty of advantages to new machinery productivity reliability etc and as you say put down a decent deposit 25%+ if things go wrong you can sell off the asset !on the plus side this asset can earn you money !open new doors or in the threads originators case get you tipping a load off instead of hand unloading which is progress.

I have hire purchased over the past 28 years with no problems spread the cost good kit good image and charge the rates to cover it!!

I must say if I had £100k sitting around in an ISA I'd use it or maybe buy to let at today's interest rates.

 

I looked at buy to let but you will pay tax on the rent probably at 40% so you may as well borrow the money to offset as an expense and keep it as long term investment/pension. Basically as long as you can raise the deposit you dont need money although its nice to know you have the mortgage covered if you have no tenants. The return of 6% percent does not really appeal when you think what you can make out of machinery for your work or buying and selling plant with a 33% margin.

[gensetsteve]

The newer kit has a lot more technology in it to give the extra hp and economy. But then that fine tuning is more likely to go wrong. I just don't know! Reading in my old mog manual it talks about putting kerosene and even petrol in the diesel in cold weather.... Can you imagine how a modern engine management system would react to that?!

 

For the first time ever I am seriously thinking of buying petrol vans. Modern diesels have more electronics and emmission devices than petrols and produce more heat so tend to destroy sensors and things quicker. Petrol engines are now getting much better mpg and its nearly 10p a litre cheaper.

[Inoff the Red]

The return of 6% percent does not really appeal when you think what you can make out of machinery for your work or buying and selling plant with a 33% margin.

 

The comment about a 6% return is a short term view. Over time as rents increase, the return on investment will increase. Then there is the capital appreciation so the comparison with a 33% margin generating (but depreciating) business asset is a bit like comparing apples with pears.

 

Well managed buy to lets can generate significant returns in the medium/long term for relatively little effort (if you stay out of the student market).

[openspaceman]

For the first time ever I am seriously thinking of buying petrol vans. Modern diesels have more electronics and emmission devices than petrols and produce more heat so tend to destroy sensors and things quicker. Petrol engines are now getting much better mpg and its nearly 10p a litre cheaper.

 

Interesting; back in the 80s I ran a 2.3 petrol Bedford 3.5 tonne truck, it was cheap to buy but the reason I went for it was it's kerb weight was 1500kg so it had a full 2 tonne payload, diesel engines were so much heavier.