Service-based and product-based businesses across different industries generally require various types of equipment for their everyday operations. If you are setting up a new venture, you will need to purchase or rent the necessary equipment. And if you are in business already, you may need to replace or upgrade your equipment.
The cost of acquiring the equipment can be high in some cases and cause a serious enough dent in your finances to affect the smooth functioning of your business. Rather than being put in such a situation, you might want to consider getting financing from a Charlotte equipment finance company.
What is equipment financing?
Equipment financing is getting a loan from a financial company or institution to buy or rent the necessary equipment for your business. You can base this decision on your overall financial situation and your business needs. For a printing business, for example, you might require computers, printing machines, and delivery vehicles. Consider if you can pay for these outright out of pocket or if that might cause financial difficulties in other areas, such as paying employee salaries or purchasing materials. In that scenario, it might be better to get an equipment financing loan and pay it off in reasonable installments.
Before you approach a Charlotte equipment finance company, have a clear idea of the type, brand, quantity, and price of the equipment you need. Next, select a specific vendor. Additionally, check and ensure that you have a decent credit score.
You will have to give the finance company the exact details of the equipment you want to purchase and the seller from whom you are buying. They will check these details from their end and your credit score before they decide to extend you the loan.
What to look for in an equipment finance company?
You might want to consider the following before getting a loan from an equipment finance company:
• Are they reliable, trustworthy, and with mostly positive customer reviews?
• Do they have a lot of experience in financing equipment in your industry?
• Can they assist with both purchasing and leasing equipment?
Buying equipment
If you seek a loan for buying equipment that you require for the long-term but cannot afford to buy outright, you want to look for a Charlotte equipment finance company that does any of the following:
• Extends 100% of the purchase price in the loan
• Extends 70% to 90% of the purchase price in the loan
In the latter case, you can pay the remaining 30% to 10% in down payment from out of pocket. Depending on your credit rating, business experience, and business standing, the lender may charge you anywhere from 7% to 30% as interest on the loan. You will have to pay the loan’s principal and interest in monthly payments.
When you get a loan for purchasing equipment, the equipment will serve as the collateral. If you are unable to repay the loan for any reason, the financier will collect the equipment. That makes this a very straightforward type of loan and it is both cost-effective and low-risk for buying the equipment you need.
Renting equipment
You may want to rent rather than buy the equipment if your business requires you to change or upgrade it frequently. You can also rent equipment if you do not have the down payment to make towards its purchase. Renting involves making a lease agreement with the Charlotte equipment finance company and making a specific monthly payment to the company for using the equipment.
At the end of the lease period, you have the option of returning the equipment, exchanging it for new equipment, or buying it at fair market value. You can also purchase the equipment at a $1 buyout lease or a 10% option lease.
With the buyout lease, you can pay the company the full cost of the equipment and the interest in installments and, at the end of the lease, pay them $1 to complete the transaction and own the equipment. The option lease is similar, except with lower monthly payments, and you can decide at the end of the lease if you want to return the equipment or buy it at 10% of its total cost.