This is where equipment financing can come in handy. For starters: You won't be using personal assets and you won't deplete your cash reserves.
An equipment loan is a type of small-business loan that helps you purchase the machinery and equipment essential to running your business, put it to work immediately, and increase your annual revenue.
There are many benefits to using an equipment finance company for your loan.
We made a list of 5 crucial elements you should pay attention to when deciding about equipment financing, so you can better understand what is equipment financing and how to get the best deal.
1. Make a list of what you need
Making a list of what equipment you need is an important step before applying for equipment loans. This will help you to narrow down your options and find the best loan for your business.
When considering what type of equipment you need, make a list of what you can’t live without
When starting a business, one of the first things you need to consider is what type of equipment you will need. This can be daunting, especially if it is your first enterprise.
However, by making a list of what you cannot live without, you can make the process much easier. This includes items such as office furniture, tools for your trade, or vehicles necessary for transportation. By focusing on what is essential, you can better equip yourself for success.
Look for equipment that is durable, long-lasting at the fair market value
Durability and longevity are important factors to consider when purchasing equipment for your business. Not only do you want equipment that will function well and meet your needs, but you also want something that will last for years to come. That's why it's important to look for equipment that is made with durability in mind.
One of the benefits of equipment financing is that it allows you to purchase high-quality equipment that will stand the test of time. When you finance your purchase through a lending institution, you're essentially investing in durable equipment that can help your business run more smoothly and efficiently for years to come. So if longevity is an important factor for you, be sure to explore your financing options.
Compare prices and find the best deal on quality equipment
When you're looking to purchase equipment for your business, it's important to compare prices and find the best deal on quality equipment.
However, be careful not to focus too much on price alone. A seemingly good deal on a piece of equipment may not be such a great deal if the equipment is frequently breaking down or doesn't meet your operational needs.
It's important to focus on quality and value when making these decisions. Making this equipment financing decision will spare you the headache.
2. Compare interest rates and equipment financing terms of different equipment loans
When you're shopping for an equipment loan, it's important to compare interest rates. This will help you find the best deal possible and save money in the long run.
When you’re researching equipment loans/equipment financing deals, one of the most important factors to consider is the interest rate. This number tells you how much you’ll have to pay back on top of what you borrowed, and it can make a big difference in how expensive your loan will be.
But how do you compare them? What should you look for when trying to find the best deal?
Here are a few tips for finding the best equipment financing deal:
- Compare APR instead of just the interest rate. The Annual Percentage Rate includes all of the fees and charges that come with a loan, so it gives you a better idea of what you’ll actually be paying. This way, you'll have a better understanding of your monthly payments, too.
- Look for hidden fees. Some lenders may advertise low-interest rates but then tack on extra fees that can drive up the total cost of your loan. Be sure to read the fine print and ask about any potential fees before signing anything.
- Consider your credit score. Your credit score is one of the biggest factors lenders consider when setting your interest rate. If yours is good, you’ll likely get a lower rate than if it’s not so great.
3. What to look for in an equipment financing company
When looking for an equipment financing partner, it’s important to ask a lot of questions to make sure you’re getting the best deal possible. Here are some key questions to ask:
What Kind Of Support Do Their Financing Consultants Provide?
Good equipment financing companies will provide support every step of the way, from the initial consultation to the very end of your monthly payments. Make sure the company you work with has a good reputation for providing quality support.
What Are My Payment Options?
Different equipment lenders offer different payment options. Make sure you understand what your options are before signing anything. You don't finance equipment every day.
4. Get pre-approved
There are a lot of benefits to getting pre-approved for a business equipment loan.
First, you'll know what your credit limit is and what type of interest rate you could expect to receive. This will help you budget better and make sure you're not overspending on a purchase.
Second, pre-approval tells the seller that you're serious about buying the equipment and have the financial resources in place for financing equipment. This can give you an edge over other buyers and may lead to better negotiations and result in getting a fair market value for your equipment.
Finally, if something unexpected comes up and you can't finalize the purchase, having pre-approval shows the lender that you were actually approved for a loan – which could make it easier to get another loan in the future.
Check out the great benefits of getting pre-approved for equipment financing explained in more detail below:
Quick and Simple Process
Applying for pre-approval is a quick and simple process that takes just a few minutes of your time. All you need to provide is some basic information about yourself and your business, and you’re on your way.
Know Whether You Qualify
One of the best things about getting pre-approved is that you find out right away whether you qualify for a loan – and how much you can borrow. This eliminates any guesswork on your part, so you know what to expect before making a purchase.
Get Competitive Rates
When you’re pre-approved, it shows the lender that you’re serious about borrowing money and is likely to go through with the loan if approved. This puts you in a strong position to negotiate competitive rates on the equipment you want to buy and leads to lower monthly payments.
Strengthen Your Credit Rating
A strong business credit rating is important when applying for any kind of loan, but it’s especially important when applying for an equipment financing loan, as these loans are typically larger sums of money.
The good news is that by going through the pre-approval process, you can work on strengthening your business credit rating – which will come in handy "when you need to borrow money for other purposes in the future."
5. Consider all your options
When it comes to something as important as your business, you can't afford to make a mistake. That's why it's important to consider all of your options before making a decision. After all, you want to make sure you're getting the best deal possible.
How to choose the best equipment finance loan?
There are many different types of equipment financing available, and each has its own set of benefits and drawbacks. So it's important to do your research and compare what each lender has to offer.
By taking the time to compare all of your options, you can ensure that you get the best deal possible for your business.
Here at Finberg Investment, we offer equipment financing that is quick and easy to obtain, and our Funding Specialists are available to help you every step of the way.
We understand that businesses need reliable equipment in order to function, so we work hard to make the process of obtaining financing as smooth as possible.
Contact us today to get started!
Deciding to purchase or lease equipment
When it comes to financing equipment, there are two main options: purchasing or leasing.
Each option has its own set of benefits, and the best choice for a business usually depends on the nature of the equipment being financed and the borrower’s ability to obtain a loan at favorable terms. If the equipment's cost is going to increase your monthly payment significantly, then you should compare the lease terms of different leasing companies, and choose the leasing company with the best offer.
Let's see what you get from an equipment lease and what you get from an equipment purchase:
One key benefit of purchasing equipment instead of an equipment lease is that when the loan is paid off, the business owns a valuable asset.
Leased equipment, rather than bought, may be an attractive option for any number of reasons.
First, obtaining a loan to purchase equipment may not be viable if the borrower can’t cover the necessary down payment or qualify for the loan.
Second, leasing is often a less expensive way to finance new equipment.
An equipment lease means that you can get better loan terms when you decide to get more equipment leases.
Is financing used equipment instead of financing new equipment a better option?
If you're starting a business, chances are you're on a tight budget. This can make it difficult to afford new equipment, but what if you could finance used equipment instead?
Equipment financing is a great way to get the equipment your business needs without breaking the bank. And when it comes to financing used equipment, there are a lot of benefits:
- You can get approved for financing even if you have bad credit.
- The interest rate is often lower than for new equipment.
- You can use the equipment while you're paying off the loan.
Of course, there are also some cons to financing used equipment:
- The equipment is already working and may need some repairs.
- There's a chance that you can end up with outdated equipment soon.
If you're considering financing used equipment for your business, be sure to work with an experienced and reliable equipment financing company. At Finberg Investment, we're experts in financing all types of business equipment, including both new and used items. We'll work with you to find the best financing option for your needs and help you get the equipment your business needs without breaking the bank.
6. Use your loan to its full potential
An equipment loan can be a great way to get the machinery and equipment your business needs. Make sure to use your loan to its full potential and take advantage of all its benefits.
Equipment loans are a great type of loan to increase your annual revenue and improve your company's financial health, because they can help you increase revenue, scale upwards, and improve customer satisfaction. By using your equipment loan to its full potential, you're giving your business the opportunity to grow. No matter how you acquire equipment (equipment purchase or equipment leasing), it will improve your balance sheet long-term.
Conclusion
Equipment financing can be a great way for businesses to get the machinery, equipment, and other business assets they need to function. There are many benefits to using an equipment finance company, such as getting better loan terms or being able to use the equipment while you're paying off the loan.
Finberg Investment is an experienced and reliable equipment financing company that can help you get the best financing option for your needs. Contact us today to get started!
