The Beginner’s Guide to Equipment Financing
Most companies at some point will need to acquire business equipment which can help them achieve a greater level of success.
If you haven’t learned much about the equipment financing process so far, the information below may be of great help to you.
Difference between equipment financing and leasing
While both financing and leasing allow you to make monthly payments toward getting your equipment cost paid off, there are some distinct differences between the two processes. When you arrange for equipment financing, you will become the owner of the equipment, and you’re responsible for all maintenance and repairs. When you lease the equipment, you have the ongoing use of all that equipment without ever owning it, unless you choose to purchase it at the end of the lease period.
Rates of approval
It’s much easier to get approved for equipment financing than it is for a traditional bank loan, because the equipment itself serves as collateral for the transaction. Especially if you can find an alternative lender who specializes in your industry, the rate of approval is much better than it would be for traditional loans.
Duration of a lease
The duration of any lease will depend on a number of factors, including the amount of your monthly payment, the total equipment cost, and any special financing terms which have been included in the agreement. In general however, the lease will last somewhere between 24 and 60 months, with the most common leasing times set at 36 months. It’s generally to your advantage to accept the shortest possible lease period, although that will also increase your monthly payments significantly.
About paying cash
It’s usually not a good idea to pay cash for business equipment, especially if the total cost of that equipment runs very high. With the ready availability of equipment financing, you’re much better off to hold onto your cash reserves and use them for business purposes.
Equipment financing with Approved Business Lending
If your company is in need of equipment financing to reach the next level of success, we may be able to provide financial assistance.
Contact us at Approved Business Lending, and let our specialists work with you to find a workable solution for your business.