We’re excited to help you understand the ins and outs of financing business equipment.
Let’s get started…
Equipment Financing Rates
Rates to finance or lease equipment depend on a few factors:
- The price of the equipment
- Who you choose to finance the equipment with
- The age of the equipment you’re buying
- Your credit
- How long you’ve been in business
The rates you pay in terms of finance charges will be lower as you buy more expensive equipment.
If you are purchasing $10,000 worth of equipment, you can expect to pay more per dollar of financing than if you buy $100,000 worth of equipment.
That’s simply because the company lending you the money is in business just like you, and needs to be able to make a profit by providing the financing.
The difference isn’t huge – but there is a difference.
Who is financing the equipment:
First and foremost:
If you qualify for bank financing, take it.
It’s going to be cheaper than going through an equipment finance company.
(If you wonder how companies like ours exist…
…it’s because banks are turning down 85% of loan applications. They also don’t typically like to do transactions under $100,000, and typically they like to lend to companies doing $5 million or more in annual sales.)
If you are buying new, or almost-new equipment from a dealer, you may qualify for 0% for four years or a similar promotion. That’s also something you should take advantage of if you can swing it.
If you are not buying equipment with bank financing or dealer incentives, that’s when you go to an equipment leasing or financing company. The costs are typically higher (we can’t stay in business offering loans at zero percent…) but depend on your business.
Annual finance charges can range from 4% of the finance amount to as high as 30% (or more) depending on your business situation.
PS – Most equipment finance websites only mention the 4% rates – which very few of their customers qualify for.
We have put together exhaustive resources to help you avoid financing companies that practice bait-and-switch financing.