Why is this a great time to make that big purchase through equipment financing?
Not long ago, financial institutions were making these huge loans and lines of credit for clients who were not worthy of repaying the loan. These institutions ended up suffering severe back burns with delinquent and eventually canceled loans. The approval of these home loans and lines of credit has hardened enormously in recent years. However, depending on the type of loan you are looking for, there may be a great opportunity to be one of the many that are being easily approved in the market.
If you need equipment financing, you may be in a great position. In March, the Equipment Leasing and Financing Association (ELFA) agreed that this is a good time to get involved in an equipment loan or lease. In February, the amount of new equipment finance loans decreased by 6% to equal $ 4.7 billion, which is the lowest number the industry has seen in the past two years.
Lending institutions, whether banks or independent, are keen to see these equipment loans reach business owners for a couple of reasons. First, because these loans are not money pledged on banks’ balance sheets, like a line of credit, they are less risky for banks. Additionally, people who take out a manufacturing lease, construction loan, or any other type of equipment financing end up with an asset that generates income for the overall business as a result of these leases. This makes the motivation to repay the loans and also on time much higher. The nature of these loans places them among the lowest in the industry (2%) when it comes to delinquency. Cancellations are even lower at a 4% rate.
If you are even considering renting equipment, now is the time to talk to a bank or independent financial institution. They will work with you even if you have bad credit to get a loan that is right for you. Equipment finance firms have had a 74% approval rating when it comes to clients, which is a high number. Some rates on these loans are even as low as 2% -5%. Make sure you speak with a specialist who has a lot of experience in all types of loans and leases so that you can get the best information to find the one that is right for you.