Equipment financing is a loan to buy physical assets for your business. Once you take out the loan, you repay the money in installments over an agreed term. You might use this type of financing to purchase machinery or vehicles for your business.
How does equipment financing work?
The terms and conditions that come with equipment financing depend on the lender. Some lenders will purchase the equipment for you. In other cases, the equipment will act as security on the finance. This means if you default on the loan, the lender can claim the asset. You might also have the option to rent or lease the equipment.
How do you get equipment financing?
Most funders offer equipment financing. If you’re applying for equipment financing from a bank, you will typically need details about the equipment you wish to purchase. The application process might be long, so this is something to consider if you need the funds immediately. Some traditional funders will also ask for collateral. Alternative lenders, like Lulalend, offer a faster way to get equipment finance, and you don’t need collateral.
For how long can you finance equipment?
The term of the equipment financing agreement depends on the lender. In addition, the type of equipment you buy will influence the term.
What is the interest rate on equipment loans?
Interest rates on equipment loans vary. In addition to interest rates, some lenders will also charge monthly account management fees. You might also need to take out credit insurance. Make sure you’re certain of all costs before you sign your equipment loan.