5 Most Important Variables that Determine Equipment Finance Rates

And the answer is always the same – finance rates depend on your situation.

The five most important variables that go into determining equipment finance costs are:

1. Who you use for financing

2. The cost/shape of the equipment (new or used)

3. Loan vs. Lease

4. Your personal credit

5. How long you’ve been in business (the longer the better)

At this point, to decide whether or not a business equipment loan is right for you, you’ll have to take a look at your business’s finances and ask yourself:

1. Can you save some money by spending (for example) $25K today and avoiding interest payments, or will that expense hurt your cash flow too much?
   

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2. If you can’t afford it now, will saving up to buy it later mean lost profits, since you could have used that equipment in the meantime by financing it with a business equipment loan?
   

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Essentially, you need to figure out whether the opportunity cost of waiting and saving outweighs the interest payments you’d make to have that equipment right now with equipment financing. There’s no right or wrong answer, yet if you plan your finances well and use the right finance company, the right piece of equipment should bring in more than those equipment financing interest payments are costing you.