Frequently Asked Questions
What is an equipment loan?
An equipment loan means that you are using a form of financing in order to purchase a piece of equipment, and pay for it over time. The financing comes with principal interest and a lender fee (interest rate) that must be repaid on top of principal interest and the total cost of the equipment payment.
How does an equipment loan work?
Equipment finance, financing is a secured type of loan, which in general means that the value of the equipment that you are buying is subject to the collateral. You will risk losing the whole collateral of financed equipment if you fail or are not able to pay repay the loan on time. Typically equipment financing loans come with a term of 3 to 10 years, but this can vary depending on a case-by-case basis.
When should you consider an equipment loan?
Equipment financing emerges as a beacon of hope when venturing into the acquisition of substantial equipment, be it a robust tractor, a precise CNC Machine, or hefty machinery. The lofty price tags on such pieces of equipment can be an immediate deterrent for a person or a burgeoning business. Hence, the customary route is to embrace an equipment loan, making it feasible to stagger the payment across a span of time. As the calendar flips to October, a period often associated with a ramp-up in operations in many industries, the urgency to procure essential equipment loans escalates. Engaging with a dealer, one could notice a plethora of options laid out, each with its unique terms and payment structures.
The prospect of generating augmented income post-acquisition of the needed equipment becomes a compelling narrative for taking out a loan. However, it’s not a subject to venture into without a meticulous examination of the accompanying repayment structure, specifically the principal interest segment of the loan. The journey from contemplating equipment acquisition to the person actually steering the newly acquired tractor or operating the CNC machine should be paved with well-informed decisions. The monthly Payment Calculator becomes an indispensable companion. It’s not merely about knowing what amount leaves your business coffer for monthly payment, but understanding the total cost encapsulated in that monthly payment figure. The Payment Calculator demystifies these numbers, presenting a clearer picture of how the principal, interest, and other associated costs intertwine over the loan term.
Furthermore, the scenario might present a fork in the road where leasing shines as a viable alternative to outright purchase via a loan. The terms of lease payments, often laden with their own set of complexities, require a discerning eye to compare against loan payments. The allure of potentially lower monthly lease payments, especially from a cash flow standpoint, might seem appealing. However, a thorough comparison using the Payment Calculator could unveil long-term implications that might sway your decision one way or the other. Should one fail to compare and notice the subtle yet impactful differences between leasing and loaning, the repercussions could reverberate through the financial health of the individual or business. The dealer at the forefront of the transaction may have incentives that do not align with your best interest, hence the onus falls on you to calculate, compare, and discern the most advantageous route.
Whether it’s about mitigating the financial strain of a hefty purchase in October or any other month, or ensuring the dealer-led negotiations are in your favour, having a reliable Payment Calculator at your disposal is quintessential. It not only illuminates the path but also empowers the dealer and you with the knowledge to negotiate better terms, be it for a loan or a lease, ensuring the equipment propels your operations forward without the dealer shackling you with unmanageable debt.
How are equipment payments calculated?
The equipment financed lease payments will be determined based on the total cost of the equipment financed by the lease amount, the downpayment that you contribute, the principal and total interest due amount, the applicable interest rate, and the term length of the lease loan. Make sure that you carefully calculate review and understand the complete subject of the terms of payment for your equipment lease loan agreement and how the lease payments are calculated.
What are the current average equipment loan rates?
Equipment loan annual due rates and fees can vary greatly and vary depending on your personal life and business financial history, the lender you are getting the or lease financing from, the type of equipment you are buying and more. In general, equipment and lease loan annual interest rates and fees can vary anywhere from 2% and go up to 20%+.
What are the best places to get an equipment loan?
The best equipment loans are hard to find all by yourself. Especially because most lenders have different loan types and different lending companies are better suited for different people. Check out the list of top ten equipment loans and loan providers at Smarter Loans as a start.
How do I qualify for an equipment loan?
To qualify to apply for an equipment lease or loan, you will typically need: Proof of residency in Canada, credit history, steady income from some form of paid employment, or some form of a profitable form of business and government issued ID.
Can I get an equipment loan online?
There are many companies that offer equipment leases and loans in Canada entirely online. At Smarter leases and Loans you can find such companies, apply for approval for an equipment lease or loan from a company from the comfort of your home, complete it and receive a pre-approval notice in 24 hours.