The Advantages of Equipment Financing
Don’t let a lack of working capital hold your business back. Free up additional capital and improve your cash flow situation by taking advantage of equipment financing options. Learn more about your financing options and why these financial tools may be just what you need to outpace the competition.
You can finance a surprising range of equipment. While a popular option is to use financing for heavy-duty construction equipment and vehicles, it’s also available for software suites, office equipment and other, smaller investments. When you finance your equipment, you have two basic options: a loan or a lease.
An equipment loan, or financing your equipment, is a great way to purchase your equipment without investing all your resources in an upfront payment. You can start operating your machinery from day one, and will simply make monthly payments. Just like a typical loan, you’ll pay on the capital and interest until you pay off your machinery. You can operate it exactly as if you own it outright, so any modifications, repairs and routine maintenance are your responsibility.
Equipment leasing, on the other hand, gives you more flexibility to swap or upgrade your equipment. A lease is an arrangement where you’re able to use your equipment for a predetermined period of time, but you don’t own it outright. Similar to a loan, you’ll make consistent payments on it rather than a lump sum. At the end of your lease you have a few options. First, you can choose to simply end the lease, return the equipment and move in a different direction. This is a great option if you’re unsure whether you need a particular piece of equipment for long-term use.
Another option is purchasing your equipment at the end of the lease. You’ll pay a lump sum in order to buy the machinery you’ve been leasing. The sum will be less than the full price, since some of the lease will count toward the principle.
Finally, you can choose to upgrade to the latest model of the same item. This is a popular option if your equipment is subject to rapid depreciation. Computers, software and vehicles can all greatly diminish in value and be difficult to resell. Lease these items for a year or two at a time, then trade them in for a newer version and a new lease.
Whether you choose equipment financing or an equipment lease, you’ll keep your capital and improve your business. Compare terms, conditions and rates among leading lenders to find the best option for your business today.