Home / Microsites / Global and Regional Markets / ADES wins two new onshore contracts in Saudi Arabia

Credit to acquire drilling machines

Credit to acquire drilling machines
Having special equipment at your disposal is very important for organizations involved in public services, especially in the field of construction and production. Currently, there are many types of various special equipment that simplify and allow the work to be carried out productively and efficiently. But we, the editorial staff of FinCor Argentina financial portal, will focus mainly on the characteristics of loans for the purchase of drilling equipment.
All special equipment is characterized by the combination of two main factors: the high cost and operation to the period of exploitation. Unlike passenger cars, the second factor is of more importance for special vehicles. The value of this type of machine depends directly on its physical deterioration, and obsolescence is only of secondary importance. As today it is impossible to do without special equipment, banks are willing to lend to organizations that cannot afford to buy the necessary equipment, since they have paid their cost immediately. Sometimes, a company acquires on credit not a unit, but a whole fleet of special equipment.

Characteristics of loans for the purchase of drilling equipment

Many banks are ready to offer special programs aimed at acquiring drilling rigs. Often, these programs are similar in terms of conditions and requirements to car loan programs. Therefore, some credit institutions are already practicing their combination. However, there are still some distinguishing features for this type of loan:
1. Banks focus on the interest rate, however, the annual percentage can be significantly reduced if the borrower provides the lender with liquid collateral or the guarantor's signature.
2. The loan amount for special equipment is determined by the value of the guarantee provided by the borrower, and also depends on the market rates for the purpose of the loan.
3. As for other types of loans, these programs offer two options to pay a loan: annuity and differential. If the cost of the equipment is very high, banks can offer the customer a delay of up to one year. Banks are also ready to consider the subject of an individual debt payment program.
4. As a general rule, the purchased equipment serves as a guarantee for a bank. However, the borrower in this case can only rely on 70-80% of the value of the object. The larger the object of the loan, the greater the discount. If the borrower does not have additional funds and needs a loan equivalent to 100 percent of the cost of the car, then the bank will require real estate or property as collateral.
5. Special equipment insurance is a prerequisite. The only exceptions are those cases in which the purchased machine serves as an additional guarantor, that is, the security deposit is higher than its value. Pay attention to the insured amount, as there are two options: the amount that reflects the market value of the car or the loan amount. The last option is considered more profitable, since the overpayment will be much lower, due to the fact that the cost of the equipment is almost always higher than the amount of the deposit. In addition, with a decrease in the balance of the debt, the accrued interest will decrease.
6. It should be noted that the amount of the loan will depend on the income received by the company at the time of execution of the contract. That is, the bank will not take into account the expected benefit of the use of special equipment. Consequently, the current income should be sufficient to make regular payments.
7. A very significant point is the procedure to evaluate special equipment. When considering the application, the borrower must have complete information on the object to be accredited: model, year of issue, physical depreciation, etc. The bank can even request a photo of the object. The bank conducts an evaluation on its own or involves an independent expert in the procedure (and this is an additional cost).

Leave a Reply

Your email address will not be published. Required fields are marked *