When your company needs to purchase equipment, but doesn’t have the cash on hand to purchase it outright, there are 2 options, equipment financing and equipment leasing. Both options will provide you with the equipment, but which one is a better option for your company?
Equipment financing works best when you are looking to purchase a piece of equipment that you will be using for a long period of time and requires less frequent updating. This will allow your company to purchase the equipment outright. Equipment financing is relatively simple to qualify for, and the dollar amount that you will be eligible to borrow will be based on the type of equipment you’re planning to purchase, and whether it is used or new. The equipment you are purchasing can usually be used to secure the loan, it’s unlikely that any additional collateral will be required. These loans will come with fixed interest rates between 8% and 30% which will be more affordable upfront but cost you more in the long run. Also keep in mind that when purchasing the equipment, even if what you purchase becomes obsolete, the loan won’t be affected and you may be paying for a piece of equipment that no longer has any use for your company.