6 Ways to get an Equipment Finance Loan

If you’re a business owner looking for ways to finance new or updated machinery, you might be considering an equipment finance loan.  Leasing or financing new or used equipment can help your business run more efficiently and profitably.  However, these acquisitions come at a cost.  That’s where a leasing or equipment finance loan might come in handy.  Here are six ways to get an equipment finance loan:

1.   Consider the current and medium-term goals of your business. 

If you're in business, you know that it's important to consider your current and medium-term goals. After all, you need to purchase equipment that will help you achieve those goals efficiently and effectively. But what if you're not sure how much you can afford to borrow? Or how long you'll need to pay back the loan? Don't worry! We've got you covered! 

When selecting equipment, it is important to do your research and consider the equipment that is efficient and will boost productivity and makes sense for your goals and budget. Things to consider when choosing equipment:

• Look for energy-efficient options. Not only is it important to select equipment that will help improve productivity, but you should also look for energy-efficient options. This is not only good for the environment but can also help you save money on your energy bill. 
• Consider purchasing used equipment. If you're on a tight budget, you might want to consider purchasing used equipment. Used equipment can be a great way to get the machinery you need without breaking the bank. However, it's important to do your research before purchasing used equipment. Make sure you know what you're looking for and that you're getting a quality product. 

2.   Consider your loan options – lease or buy? 

To lease or buy, that is the question! Do you know the difference? Below, we give you a brief description of each option. 

Commercial Lease 

A commercial lease allows you to make regular payments to rent equipment for an agreed period.  However, it is important to remember that there are limitations when it comes to a lease.  Your business does not take ownership of the equipment so there are limitations on its use.  When the lease ends, you can enter a new lease, hand back the equipment or you may have the opportunity to purchase the equipment by paying a ‘residual’ value.

A lease can be an affordable option if you do not qualify for an equipment loan, or if you need to upgrade your equipment regularly.

Equipment Loan (Chattel Mortgage)

When you take out a loan to buy equipment, also known as a chattel mortgage, you acquire ownership straight away.  Your business will make regular repayments and at the end of the agreed term, you will pay a balloon or residual amount to clear the balance.  You will be responsible for maintenance and there are no limitations on usage.  However, if you default on your loan, the lender will have the right to repossess and sell to recoup the debt. 

Both strategies will aid in increasing liquidity and improve the cash flow of your business. 

3.   Check if you qualify?

If you're looking to finance new or used business equipment, you may be wondering if you qualify for an equipment loan. Here's what you need to know to see if you're eligible: 

• You must be over 18 years old and eligible to work in Australia
• You must have held an ABN for 12 months or more
• You must have a good credit score

Keep in mind that the equipment must also be used predominantly for business purposes. If you don't qualify for an equipment loan, don't worry - there may be other financial solutions available to you. Speak with an experienced finance broker to learn more. 

4.   Know your credit score. 

When you're in the market for equipment financing, it's important to understand how your credit score will affect your loan application. Here are a few things to keep in mind: 

• Your credit score will play a big role in determining if you qualify for an equipment finance loan. 
• Be sure to check your credit score before you apply. 
• You can check your credit score for free using a service such as Equifax. 

By understanding how your credit score will impact your loan application, you can be better prepared when it comes time to finance your equipment.

5.   You choose the repayment amount

As a business owner, you know that cash flow is everything. -You also know that when it comes to loans, the terms and repayment amounts can make or break your business. That's why an equipment loan offers you the flexibility to choose your repayment amount and term, so you can find a loan that works for your business. 

With an equipment loan, you can choose a lower monthly repayment and a higher balloon or residual payment at the end of the term, or a higher monthly repayment to reduce or eliminate the amount owing at the end of the term. 

And don't worry, at the end of the loan term, you can even refinance to cover the balloon payment owing.

6.   Speak to an experienced broker at Finance Brokers Victoria

If you're considering equipment finance, it's important to understand the different options available to you. Working with an experienced broker can help ensure that you get the best loan for your needs.

At Finance Brokers Victoria, we have a team of experienced brokers who are dedicated to helping our clients find the right finance solution for their business. We understand that each business is different, and we take the time to get to know our clients so that we can tailor a loan solution that meets their individual needs.

If you're looking for equipment finance, we can help you find the right loan to meet your needs. Contact us today to speak with one of our experienced brokers.