It’s important to shop around for equipment financing in order to ensure that you’re securing the best rate and terms available to you. Here’s a look at five factors to consider while weighing your options.
Interest rate: The interest rate you’re given can greatly impact your cost of borrowing and, as a rule of thumb, picking the loan with the lowest interest rate will help you save money. Business loan interest rates can vary greatly between lenders, so be sure to gather loan offers from multiple lenders before making your decision.
Repayment term: Your equipment financing loan offers may come with different repayment terms. In general, longer repayment terms come with lower monthly payment amounts, while shorter repayment terms offer lower interest charges over the life of the loan. Whichever route you choose to take, just make sure that you’ll be able to keep up with the repayment schedule on an ongoing basis.
Funding time: Funding times can also vary between lenders. Some lenders offer same-day funding while others can take a few days or weeks to complete a funding request. Do your best to choose a lender whose funding schedule suits your needs.
Additional fees: Some lenders charge extra fees, like origination fees or prepayment penalties. Be sure to read the fine print of your loan agreement so that you’ll be prepared for any fees that come your way.
Loan purpose: Some equipment financing loans come with restrictions on what you can buy with the funds. Check to ensure that the loan you choose is a match for your business type and intended purchase. If not, don’t be afraid to explore other options.