What is Equipment Financing?
Equipment financing refers to loans that are collected from financial lending institutions in order to purchase equipment. These form of loan usually come with interest rates which are payable within a specified time as agreed by the parties, -the lender and the borrower involved.
Equipment financing gives any business-type a fast and easy way to own or purchase any type of equipment, -vehicles, machinery, and even computers.
- Qualification for Equipment Financing
- How Term Loans Work?
- How to Apply for a Real Estate Loan
- What it will cost you
Qualification for Equipment Financing
Virtually all business-types will qualify for equipment financing as it is dependent on few stipulations.
Your business financial history, credit score and the value of the equipment determines how much you can have access to.
Having a good credit score makes you a worthy candidate for equipment financing. However, every lender wants to be assured that you can repay whatever loan you are been given. This makes your annual revenue an index in having your equipment financed.
How to Apply
Getting your equipment financed is quite an easy process. But, you will still have to meet some stipulations which will include:
- A Valid Driver’s License
- Voided Business Check
- Bank Statements
- Business Tax Returns
- Equipment quote
How Equipment Financing Works
The importance for an equipment financing is seen in scenarios when your business needs a particular to equipment to bring in more revenue, and you lack this equipment, you need to try the option of equipment financing.
In equipment financing, there is no need for collateral as the equipment you are purchasing is the collateral for the financing. The amount you can have access to is actually dependent on the price of the equipment you are purchasing whether it is a new or pre-owned.
Since the equipment provides security for the lender, it is easy for any business-type to qualify. In case of a default, the lender can easily repossess the equipment. The lender auctions the equipment to recoup the loan amount.
In getting any equipment financed, the lender will request for equipment quote. This gives the lender an insight into what the actual value of the machine is. With this, the lender is able to finance the equipment.
What it will Cost you
Going through the terms and policies of equipment financing is necessary before you sign to avoid any hidden charges that may affect your budget.
Loan terms and interest rates affect the overall cost of the loan in the long run. It is necessary for you to choose a loan with a shorter term as the interest that will eventually accrue at the end of the term will be less.
Benefits of Equipment Financing
Equipment financing does not just provide a faster and easy means to own equipment, but it does this with limited paperwork and the equipment that is being purchased serve as the collateral.
The equipment can be repossessed by the lender upon default by the borrower. Other amazing benefits of equipment financing include:
- Maximum loan amount is 100% of equipment value
- Loan term is expected life of equipment
- Interest rate is as low as 5%
- Can be concluded as fast as 2 working days