Equipment finance is a great solution for those looking to invest in new equipment, but did you know that it can also be used to finance repairs and upgrades to existing equipment?
For small businesses, upgrading or buying new equipment can be beneficial but many owners may not have enough capital to make an outright purchase.
Equipment finance can be a helpful option, especially since the asset finance market in Australia is worth $100 billion in receivables and around $40 billion in new equipment loans are written each year.
What equipment finance types are most commonly used?
The two most common types of equipment finance are vehicle and equipment loans and equipment finance leases. Vehicle and equipment loans comprise 78% of the finance market and allow the business to own the asset while using it as security.
An equipment finance lease allows the bank or lender to own the equipment and rent it to the business for an agreed term at a fixed rental rate, with the option to return, refinance, or purchase the equipment outright at the end of the term.
Which is more suitable for me: an equipment loan or an equipment lease?
To determine whether an equipment loan or lease is best for you, consider the expected productive life of the asset. If you'll need an update soon, leasing might be better. If the equipment will generate value for a long time, a loan may be better.
Is it advisable to use a broker?
Finance brokers can assist you with the equipment loan application process and provide access to a variety of lenders and finance products. They can help you secure the most competitive interest rates and advise on the best option for your business.
During the finance period, who is accountable for the equipment?
At the beginning of the agreement, clarify who will handle equipment maintenance, repair, and replacement during the finance period. This will help avoid unexpected expenses in case of damage or malfunction.
What occurs at the conclusion of the finance period?
To avoid confusion, make sure you comprehend what happens at the end of the finance period before signing any agreement. The possible outcomes can differ depending on the finance option you select. For instance, if you opt for a lease, you may choose to return the equipment, refinance it, or buy it outright when the agreed term ends.
Avoid guessing and maximise your financial potential with a finance broker by your side - Contact our team of experts today.
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