When it comes to financing the purchase or lease of new equipment, there's no better option than an equipment finance solution. Here's a look at how this kind of financing works in action, using a real-world example:
In 2016, ABC Corporation decided it was time to upgrade its production line. The company had been using the same equipment for several years and it was starting to show its age. ABC didn't have the cash on hand to pay for new equipment outright, so it turned to equipment finance.
Equipment finance is a type of lending that allows businesses to borrow money to purchase new equipment. The equipment itself serves as collateral for the loan, which means that if ABC couldn't repay the loan, the lender could seize the equipment.
ABC worked with a lender to finance the purchase of new production line equipment. The total cost of the equipment was $100,000 and ABC borrowed the entire amount. The loan had a term of 36 months and an interest rate of 7%.
Over the life of the loan, ABC made 36 monthly payments of $3,194.72. At the end of the loan term, ABC owned the equipment outright.
Equipment finance is a good option for businesses that don't have the cash on hand to pay for new equipment outright. It allows companies to get the equipment they need without tying up their cash flow. This can be anything from office furniture and computers to vehicles and manufacturing machinery. Rather than being stuck with outdated technology, businesses can use equipment financing to keep up with the latest trends and ensure that they have the best possible tools for both their needs and their customers.
One of the main advantages of equipment finance is that it can help businesses save money on their taxes. The interest paid on the loan is often tax-deductible, which means that businesses can lower their overall tax bill by financing their equipment purchases.
Businesses preserve working capital with this kind of financing, too. Rather than using up all of their cash to buy new equipment, businesses can use equipment financing to spread the cost over time. This can give them the flexibility they need to invest in other areas of their business or take advantage of opportunities as they arise.
If you're thinking about financing the purchase or lease of new equipment, equipment finance could be the right option for your business. Contact us today to explore your options at info@coretechleasing.com.
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