Does an equipment lease for bad credit really benefit your business in the long run?
Even as a regular person just living your life and working on your career, keeping your finances in order can be a challenge. There is always a mountain of expenses and sometimes it seems like you’re just not going to have enough to afford everything.
Sometimes situations arise and financially you make mistakes, causing your credit to dip and putting you in a tough place as far as your credit score. A bad credit score is easy to get, because all it takes is one mistakes and the rest of your financial career is affected by this minor blemish you deal with.
Buying houses, getting a car, taking out a loan- it’s all affected by your credit score, determining what kind of deal you get. This gets much more complicated if you’re running your own business, simply because the stakes are much higher if your credit score isn’t so good.
Everyone makes mistakes, and if you have worked to get past your financial issues and have hit the point where you’re running a company, you shouldn’t have to suffer. Your business needs an effective way to get everything it needs for the business, but with bad credit it’s tough to get good loans and such.
Many company owners look into seeing what an equipment lease for bad credit to get an effective way to get their equipment without paying too much.
Purchasing Equipment for your Business with Bad Credit
Many business owners prefer the ability to purchase their equipment simply because they believe it’s easier to make the one purchase and then they don’t have to worry about paying for the equipment any time soon. Many business owners just like the benefit of being able to own their equipment; they own their business and want to own everything that runs it as well.
Plus, purchasing equipment allows you to get to claim the equipment as a business asset, allowing you to get some initial funding for the equipment. However, purchasing completely depends on the type of equipment you get, because some hardware is tougher to acquire than others.
With cheaper equipment, like smaller tools that are common in businesses, everything about the purchase and maintenance is fairly easy. You’re not exactly breaking the bank buying the equipment, and paying to replace it when it inevitably breaks is pretty easy because the equipment is so cheap.
Plus, hardware like that tends to last longer; for example, if you had a tool kit with equipment like hammers and such, it will tend to have a fairly high longevity because there aren’t a lot of ways to break it.
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On the other hand, with capital equipment, not only is the purchase expensive, but fairly soon after something is guaranteed to go wrong with the equipment. Sometimes repair can occur but generally, it is better off financially to just replace the equipment, which does cost quite a bit of money.
Equipment Lease for Bad Credit
With purchasing capital equipment, you generally either have to allocate the funds to do so, which can be difficult, or get a bank loan. With bad credit, however, getting a reasonable bank loan is fairly difficult, especially considering you’re taking a loan on capital equipment.
When taking a loan, the big factors are how much you’re loaning and the interest rate, and if you’re loaning a lot even a low interest rate can mean quite a bit of interest to pay for. With bad credit, it’s hard to get a good loan or even get loans at all, meaning the interest rate is generally a little higher and tougher to deal with.
Businesses are generally better off getting an equipment lease for bad credit, because your credit score is not a huge factor in the lease. Leasing companies do soft credit checks that don’t affect your credit, and leasing means you pay flat monthly rates throughout the duration of the lease.
Even if your bad credit means a higher monthly rate, that is so much easier to deal with versus a large loan on your equipment that you can’t pay back. To learn more about equipment lease for bad credit, click here.