If you’re in the market for new equipment, you’re probably wondering how to get the best finance rates. The good news is that there are a few things you can do to ensure you get the best deal possible.
But what is equipment finance? Equipment finance is a way to obtain funding for the purchase of equipment for your business. The terms of the loan are customized to fit the needs of the borrower and can range from short-term loans for new equipment purchases to long-term loans for refinancing or expanding an existing business. Equipment financing can be used to purchase any type of business equipment, including vehicles, machines, and computers.
Keep reading to learn more.
Know the three types of equipment financing.
There are three types of equipment financing: secured, unsecured, and vendor programs. Secured loans are those that use the equipment as collateral to secure the loan. Unsecured loans do not require collateral but usually have a higher interest rate. Vendor programs are offered through the manufacturer or supplier of the equipment and can be either secured or unsecured.
The interest rates in the equipment finance business vary depending on the type of loan, the amount being borrowed, and the credit history of the borrower. The best rates are typically available for secured loans with a good credit score. Unsecured loans will have a higher interest rate, and rates for vendor programs may also be higher than for traditional bank loans.
When shopping for a loan, it is important to compare interest rates from different lenders. Be sure to ask about all fees associated with the loan, including origination fees, prepayment penalties, and late payment fees.
Compare equipment financing rates.
There are a few key things to understand when comparing equipment financing rates: the interest rate, the APR, and the lease term. The interest rate is the base rate that you will be charged on the loan. The APR (annual percentage rate) takes into account any fees or other costs associated with taking out the loan and is expressed as a yearly percentage. The lease term is how long you will have the loan.
When comparing different financing options, it’s important to make sure you are looking at loans with similar interest rates, APRs, and lease terms. Otherwise, you won’t be able to compare them accurately.
It’s also important to keep in mind that not all lenders offer the same terms. So if you find a deal that seems too good to be true, it might be from a company that doesn’t have as good of terms as others. When comparing quotes, make sure to ask about things like origination fees, prepayment penalties, and late payment fees.
Ask for discounts.
When you are looking to finance new or used equipment, always ask for discounts. Many dealers and lenders offer discounts to customers who are willing to bundle their financing needs into a single loan. Others may give discounts to customers with strong credit histories. There is also usually a discount available for early repayment of the loan. Ask your dealer or lender what discounts are available, and be sure to take advantage of them.
Renew your equipment finance agreement when necessary.
One way to ensure you’re always getting the best equipment finance rates is to renew your equipment finance agreement when necessary. Many companies will offer discounted rates for customers who commit to a longer-term agreement, so it’s in your best interest to do whatever you can to keep your rates as low as possible. By renewing your agreement at the right time, you’ll be able to lock in those lower rates and avoid any potential increases that could occur down the road.
There are several factors that lenders consider when approving an equipment finance loan. The creditworthiness of the borrower is important, as is the value of the collateral pledged against the loan. The lender will also want to know how the equipment will be used and what type of return on investment (ROI) it is expected to provide.
Lenders typically offer lower interest rates on secured equipment finance loans than on other types of business loans because the risk is lower. The lender knows that if the borrower defaults on the loan, it can repossess and sell the equipment to recoup its losses.
Getting the best equipment finance rates is important for a number of reasons. Lower rates can save your business money, help you stay competitive, and free up cash flow for other needs. To get the best rates, you’ll need to compare quotes from a number of lenders and be prepared to negotiate.