By Peel Financial Inc.

12/10/2013 Any businessman worth his salt understands that free flowing capital is integral to survival. It is capital that sustains a business and takes it past rough waters. Equipment Loans Canada is a great way to keep cash for alternative uses. This can help you explore new opportunities, meet financial goals, achieve seamless payroll and manage other liabilities. Peel financial offers you excellent equipment loans at great interest rates.


But how do you approach equipment financing programs. Whether you are looking for machinery or tools, here is a 5 step guide to approaching financial constraints for equipment purchase.
1. Useful Life: Businesses do not prefer to lease equipment because they have to surrender equipment at the end of lease. This can create bottlenecks for ongoing work. Most surrendered equipments have a useful life left even after lease period is over. Equipment lenders are aware of this fact and set loan terms accordingly. So, whether the equipment is leased or purchased, the amount of life decides the loan amount and rates.




Introduction of new technology also renders old equipment obsolete. Technology upgrade also kicks out old machines. So, leasing equipment can lower costs and also opens up option to upgrade quickly.



2. Fee and Rates: Most equipment lenders offer interest rates based on prime rates or float based rates. Libor index may also be used by some lenders. This can cause fluctuations in your payment. Term of agreement should include the lease rates or loan rates. This makes your payment independent of the market conditions. Bank loan rates generally move lower as and when the interest rates fall.


Fee associated with loans and leases should also be taken into consideration. You business finances can be affected due to large fee on used trucks for sale. Compare the merits of fee as per the overall costs of leasing/loan of the equipment.

3. Term: Lease terms can be strict or friendly as per the lender. The policy of the lender further varies on the credit score, industry conditions, your business’s financial condition etc. If you plan on upgrading the equipment soon, leasing for short duration is the right way to go. However, if bank is offering equipment loan at good rates, go for the loan and you can have a long-lasting machine.



4. Lease or Loan Amount: The final loan or lease amount can include many upfront costs. Initially, the lender will cover these expenses including shipping, training & installation. But all these charges are included in the loan and interest is charged on them. If possible, you should pay these expenses on your own. Also, try to make large down payment to reduce the monthly payments.



5. Collateral: If the equipment loan is large, some banks/lenders may require collateral. However, most lenders are lenient in terms of collateral. But when large equipments are financed, banks limit their choice of machines they can finance. They may not categorize the equipment but can limit your options. Good collateral can increase your chances of getting loan for high-end equipment.


Deciding whether to lease or go for a loan can be quirky. If an asset’s value decreases over time, leasing it should be preferred. However, it all comes down to real-world benefits and costs of the concerned equipment. Just like Peel financial, Canada Equipment Loan, too, provides excellent loan facilities for buying used/new equipment and contribute to your business success