In the case of equipment financing, the equipment leasing finance companies loans you the capital to purchase a piece of equipment. You purchase the equipment with the capital you receive and then repay the loan, including interest, over a period of time.
With equipment financing, you own the equipment that you have purchased. However, with equipment leasing, a financing company, lender or vendor allows you to lease the equipment you need for a certain period of time without having to buy it or seek financing for it. You make monthly payments for a fixed number of months, and when the lease comes to an end, you can either renew your lease, purchase the equipment, or return the equipment. In this article, here are several benefits of equipment leasing and tips on how to get your lease approved.
Why choose Equipment Leasing
1. Up-to-date Equipment
Let’s face it, it is not quite efficient and feasible for any business to buy new equipment every year. When you need equipment for a short period of time, it is best that you go for short-term leasing as it will allow you to equip your business fully with the latest machinery. For instance, if you are planning to acquire medical or electronic equipment, then leasing it would be perfectly suited for your business.
2. Low Monthly Payments
In the case of equipment leasing, the monthly expenses are quite low as opposed to purchasing equipment with a line of credit or loan. Hence, equipment leasing is usually the best alternative for small business owners who do not have cash in abundance to purchase their new equipment.
3. Say Goodbye To Down Payment
Usually, equipment leasing does not call for a down payment. You will see that many equipment leasing companies offer fast and simple procedures for getting your lease approved.
4. Fixed Interest Rates
If you are struggling between choosing equipment financing and equipment leasing, you must keep in mind that equipment leasing gives you more flexibility in terms of interest rates. With the help of an equipment lease rate calculator, companies offer you a fixed rate for the term of your lease.
How Can You Get Your Equipment Lease Approved?
Like any financing, you need to meet certain requirements prior to being approved. Here is what you need to be approved for equipment leasing.
1. Credit Score
If you have a high credit score, it means that you have a history of paying debts on time instead of over-committing yourself financially. However, if you have a low credit score, your chances of getting lease approval can be pretty slim. If you have a high credit score, it shows that you have been at paying off any debt that you have incurred. On the other hand, if your credit score is low, you can take steps to improve it, start making payments on time, getting rid of unnecessary credit cards, paying off outstanding balances. Take the time to go through your credit report to make sure that there is no error.
2. Intended Use
Financial lenders want to know what is the equipment you need. How it will be used. Will it increase your revenue? And finally, if you really need it. With this in mind, prepare ahead of time a plan that you can present in your favor.
3. Credit History
Your credit history is one of the most important elements for calculating your credit score. If any of the following events have taken place in the past 5 years, know that you will be declined: bankruptcy, consumer proposal, debt consolidation, payment defaults.
If you are looking for equipment leasing for your business operations, then Vendor Lender is the place to be. We love seeing our clients grow their businesses with our support. Our team of professional lease brokers is dedicated to helping you get your lease approved and take your business to a whole new level.
Published by Vendor Lender