Is it Possible to get an Equipment Lease with Bad Credit?

Can companies get an equipment lease with bad credit, or is leasing not the best option for your business?

equipment lease with bad creditKeeping track of spending versus earning day in and day out can be fairly difficult, especially if you’re doing more than just managing your own finances. Many people end up slipping at some point, and unfortunately it can cost you some goodwill in the future in the form of your credit score.

A low credit score means businesses know, at some point, you fell behind on your payments, and you’re less likely to be trusted as far as money being loaned out to you. Some professionals will end up trying to start their own business as a way to get up to the next level of experience, only to realize that their low credit is still following them and causing them issues.

This occurs specifically because starting a business runs purely out of your own capital and this normally means you’ll need some form of a loan to actually get started. One of the main parts of companies that involves loaning is equipment, because companies like restaurants and fitness centers require some very heavy duty equipment you simply cannot afford at the start of your business.

The solutions are normally either through getting a bank loan or getting an equipment lease, but can you get a decent bank loan with a low credit score? Can companies even get an equipment lease with bad credit?

Purchasing Equipment with a Bad Credit Score

There are some advantages to purchasing, but you can only take advantage of them if you can actually afford it, and with all of the other expenses you have, odds are low that you can afford all of the hardware you’ll need. However, it is convenient to pay for some of your lower grade hardware just to have it, and you also get to claim it as a business asset, getting you funding for your business equipment.

However, even without the bad credit score, purchasing equipment with a loan can be an issue. With heavy duty hardware, it’s a guarantee that you’ll need to repair and/or replace all of your hardware at least once within a few years, and this can be quite costly.

In other words, you have to pay to buy the equipment and then you have to pay again for your equipment when it deteriorates, and if you get a loan the odds are low that you’ll have paid it off.

Most likely, you’ll be accumulating debt with your loan while continually paying to replace your hardware and keep your business running. This is made worse with bad credit, because even if you do get that loan, your interest rate will be so high that the amount you owe will be even more over time.

Getting an Equipment Lease with Bad Credit

One of the advantages to leasing versus loans is that, with a loan, you get a hard credit check so not only is your bad credit revealed, but your credit score is lowered as a result of the credit check. With leasing, you get a soft credit check, meaning you can get an equipment lease with bad credit without hurting your credit further.

Leasing involves a flat monthly rate, a contract period, and other deals and factors involved in the lease. For example, your equipment can be repaired or replaced in certain instances depending on the state of your hardware and a certain rate, but you still don’t have to pay the full cost to repair or replace the hardware.

In addition, many leases have a deal for you as far as an upgrade, either during the lease or if you continue the lease, meaning you get the best, upgraded equipment possible. With an equipment lease with bad credit, the lease entirely depends on what you get, and normally is predetermined before you get the lease.

In other words, you and the leasing company determine what you get out of your lease contract before starting the lease, so you can make sure that the monthly rate and contract period are all agreeable to you before signing the lease. To learn more about getting an equipment lease with bad credit, click here.