If you are planning to buy assets for your business and do not have money for it, then what you need is equipment financing. Everything from PCs and office desks to heavy machinery and farm equipment can be purchased without paying the full price in advance.
Why Rely on Equipment Financing?
This kind of financing may be used to borrow or buy any business asset. Businesses commonly obtain equipment financing in the following situations.
- They require expensive equipment, but cannot afford to buy it upfront;
- They have to replace their business equipment often because its lifespan is short or they want the newest in technology; or,
- They require a combination of the aforementioned.
Is equipment financing appropriate for your business? When its situation is similar to one of the above-mentioned, then the answer may be yes. However, you can get financing in two different ways, and it is important to understand these to make the right decision.
Equipment Loaning versus Leasing
You can finance an equipment unit through a lease or a loan. Both provide you with access to the equipment you need to operate your business, but there are lots of differences between these two methods. Learn more about those differences, and consider the following to choose between an equipment lease and loan offered by businesses like Fundygo.
Do You Have Money for a Down Payment?
If you are unable to pay 20% of the total value of that product out of your pocket, then you may have trouble finding a lender which is ready to help you. In this situation, your only option may be an equipment lease.
How Much Money Can you Pay Each Month?
Equipment leases often carry relatively smaller monthly payments than an equipment loan. If you are operating on a slender profit margin, then a lease is surely worth it. Be aware that when you are planning to buy an equipment unit after the lease term, it is likely that you will need to pay a portion of or all of the price of that product, and that this arrangement will possibly be pricier in the long run.
When Will That Equipment Be Obsolete?
If you are using something that will wear out quickly, then leasing may be the more affordable option, and at the end, you need not decide what next to do with your outdated equipment.
When shopping for an equipment lease, be sure that that item is not going to be obsolete before the terms are up. You still have to pay to the end of your lease term, even when you cannot use that equipment any longer.