6 Equipment Leasing and Financing Tips
Whether you decide to lease or finance your equipment, you need the funds to do it. While it’s exciting that your company needs new equipment, you might be dreading the process. What are the steps you should take? What are the equipment leasing and financing tips and tricks you need to be aware of?
1. Review Your Credit
Of all the things to prepare yourself, knowing your credit profile is at the top of our equipment leasing and financing tips we can give you. Know your information in advance before you apply to lease or finance equipment so you’re not met with surprises. Get your information organized, because the providers are likely going to ask for it. It will streamline the process. You should also be prepared to give an explanation of any issues that may be present in your credit. Not only knowing your score but knowing what is ON your report is very important. CreditKarma and other free reporting apps or website wont always provide you with the most accurate credit score number. While many free credit reporting services show you whats on your report, they don’t accurately calculate your FICO score. CreditKarma, for example, uses their own score model which can create a difference by up to 40 points.
2. Know Your Plan
It’s possible a lender may want to know your projected business plan, so they can be sure that you will have the proper funds to pay for your equipment as time goes on or up front. You should be ready to tell your potential lender about how the equipment you’re leasing or financing may be used, and how your business will benefit from the use of the equipment.
3. What Kind of Lease Do You Want?
If you do decide that you want to lease, there are different options for you to choose from.
A capital lease is the kind of lease that you should use if you plan to or are thinking about buying the equipment at the end of your lease terms. If you’re planning on leasing the equipment for a long time, capital leases will allow you the terms to do so for the best price.
An operating lease is considered more of a rental agreement for the equipment that you’re using. This lease is more preferable, and slightly more flexible than a capital lease. The payments on this lease are tax deductible.
4. Do Your Research
One of the top equipment leasing and financing tips out there is to be as knowledgeable as you can be. It’s tempting to go for the first company you see that appears to have a simple process. The bank or the manufacturer of the equipment might seem to be offering you easy solutions to financing your equipment, but there are likely better options out there. A little research never hurt anyone, and it can definitely actually help you. Take your time and compare the options available to you, including fees, rates, and terms of the lease.
5. Do it on a Single Payment
Almost every time, it will make sense to combine multiple purchases or leases of equipment all into one deal. It makes for the most simple transaction, and it’s essentially always the most cost-effective method. When you have multiple pieces of equipment spread out over several loans, it can be more confusing and more costly.
6. Stay Loyal
When submitting lease applications, try to do it as little as possible. It complicates matters because if others lessors see that you’ve applied somewhere and been rejected, they’ll have questions about financing your loan. When you’re doing your research, find companies that are known for approving your specific type of situation so you have more of a chance of getting approved the first time.
Our seventh and final tip? Just ask TopMark Funding. We specialize in equipment financing; you don’t have to sweat it if you don’t know all the answers in the process. We know, and we can help you.
Leave it to professionals when you’re overwhelmed with getting your equipment. We’ll take the hard work off your plate so you can focus on the other areas of your business growth.