Financing Options For Printing Equipment

Owning and using a printing equipment is a necessity for most businesses, regardless of the industry. Many companies rely on printing equipment and technology for communication, design, manufacturing, and production. There is no question about the advantages of utilizing the latest printing equipment to ensure increased efficiency in your work, which is why upgrading is often recommended. Business owners have a choice between new and pre-owned printing equipment, either of which is a good option. Either one does require some high upfront cost if purchased, however. Thankfully, Equipment Loans Online have these types of equipment loans available to make it easier to switch to upgraded printing equipment.

Understanding the Equipment Loan

Equipment loans are a type of financing that offers the opportunity for business owners to obtain equipment or machinery they need in their business without paying cash. This is a particularly helpful option for small businesses or for companies that do not have enough cash to pay for equipment. Most of these loans do require a down payment, however, which may range from 10% to 30% of the total price of the printing equipment. In some cases, the lender finances the entire cost, although it may charge a higher monthly payment from the business owner. The business owner enters into an agreement with the financier or lending company for a specific period of time which may be renewed or terminated at the end of the contract. 

Financing loans are not the same as traditional loans wherein the lender would require some form of collateral. If the business owner fails to make the monthly payments on time, the financier or lender may simply repossess the equipment. 

Most equipment financing loans have fixed interest rates, which could range from about 8% to a high 30%. When choosing an equipment financing option, make sure to read the fine print and do the math to determine whether the agreement will be affordable to you over the long term. Depending on the lender and the equipment, equipment loans can last from a year to 10 years. The number of repayments you will be making during this period should be reasonable and affordable enough so you could recoup it using the equipment you intend to lease. Otherwise, look for a better deal from another lender. 

Although no collateral is required of the business owner to enter into an equipment financing agreement, lenders will still want to check if the business’ credit is reliable. A bad credit score will likely put off the lender, but some may be willing to allow you access to financing, depending on their terms, the type of equipment you want to lease, and your ability to pay. 

Types of Equipment Loans Available

Lending and funding companies typically offer different types of equipment loans, each of which offers a number of advantages. These are:

Purchase Option

A purchase option lease allows a business to obtain the printing equipment in exchange for affordable monthly payments. At the end of the lease, the company has three options: purchase the equipment at its fair market value, surrender the equipment to the lender, or renew the equipment lease. This arrangement is preferred by many business owners because it is a convenient and affordable means to obtain and use printing equipment. 

Should the business owner decide not to keep the equipment after the end of the lease, he would have essentially paid for the use of the equipment through the monthly payments to the lending company. If the equipment proves to still work excellently at the end of the lease, the business owner may continue to use it while making the monthly payments. Since all types of equipment depreciate in value over time, the business owner may even opt not to renew the contract by the end of the lease term and just simply return the printing equipment. 

Asset Lease

In an asset lease agreement, the business owner works with a financier who purchases the printing equipment. The business owner gets to use the equipment but pays a monthly repayment amount to the financier for the duration of the agreement. Once the agreement term ends, the business owner has three options: offer to purchase the equipment and pay a residual amount to the financier, sell the equipment then apply for a new lease on a new equipment, or have the residual refinanced and continue the lease agreement. 

An asset lease offers good flexibility for the business owner. Contract terms under this agreement, for example, are often flexible while interest rates are fixed. This allows the business owner to have better control over the cash flow of the company since he knows exactly how much he will have to pay every month. 

High-Value Lease

Some lenders or financiers may offer the high-value equipment lease. This type of financing option is specifically designed for high-cost equipment, typically those that have a price tag of over $150,000. Note that not all lenders offer this type of option but those that do use this loan to service a sector of the industry that requires high-end or specialized equipment through affordable means. This type of loan usually has more stringent requirements and usually carry a higher monthly payment. However, it is a very useful financing option to look at if your business requires a specific type of equipment that has a higher cost.