Used Equipment Financing

Lenders treat used and equipment differently depending on its use and industry.  It is important to consider the useable life of equipment prior to deciding how you will finance it. Leasing companies tend to allow for higher advance rates on used equipment than lenders. I have even seen some leasing companies use a higher than “fair market value” dollar for equipment that is being refinanced.

Traditional lenders will work off of a liquidation value of equipment. They will use the fair market value and discount it by as much as 50% for the loan. This will greatly impact the amount of money you will need to put towards the purchase or refinance of your used equipment.

Make sure you consider your options. Ask other business owners who have similar equipment needs. Find out if they have chosen to lease or obtain a loan for their equipment. You may also consult a professional who can protect your interest in the process. In any case, don’t make the decision based on what the lender you choose tells you. They may not have your best interest in mind.

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