When you need equipment, you have two choices: buy or finance. While it may be tempting to own your equipment outright, investing that much capital can put you in a precarious situation. Financing, on the other hand, lets you space out payments over time while offering several other benefits.
Lets You Forecast Your Budget
Equipment financing means you have a fixed payment due on the same day each month. Being able to anticipate that expense lets you budget confidently. Even better, if you can make early payments that knock your principal down, you can save on interest over the course of the loan.
Offers Tax Benefits
Certain kinds of financing are tax deductible, which means you can earn credits toward the amount due to the IRS. In fact, many lenders are happy to work with companies to set terms that fall in line with their tax objectives. Of course, you should discuss this topic during the application process to ensure you’re not missing out on any tax-related opportunities.
Doesn’t Require a Down Payment
When you choose equipment financing, you may not have to make a down payment. If one is required, the amount is usually small. You may also have the option to make a voluntary down payment that decreases your monthly payment or the amount of interest.
Making a large purchase all at once can be a big risk, especially if you’re a small business. Many times, companies need those funds for daily operations. By splitting up the cost into smaller payments over time, you mitigate the risk of lacking funds when you need them most.
Allows You To Combat Inflation
One of the best things about loans is that you’re locked into the terms once you sign the agreement. That means you don’t have to worry about paying more interest if rates go up. Additionally, even if inflation becomes an issue in other areas, you don’t have to worry about paying more for your equipment.
Lets You Access the Newest Technology
Most industries see advancements in technology on a regular basis. However, getting the newest equipment can be very expensive. If you have to make a lump sum payment, you may have to settle for something less than the best. In contrast, financing lets you get what your business really needs by making expensive options more accessible.
If you’re looking to acquire equipment, you should consider financing. The benefits are impossible to argue with and there are many lenders out there willing to work with customers to meet their unique needs.