Auto repair shops steadily see a rise in business with the average fleet age at seventeen years old and the average age of personal vehicles at eleven years. Whether you are starting an auto repair shop or trying to grow one you already own, you need equipment.
The equipment needed for an auto repair shop is big, heavy, and expensive. With a lot of complex operations and liabilities, it’s important to know where you can turn for help in financing this type of equipment quickly and easily.
Financing or Leasing
You don’t always have to buy equipment when you need it. You could lease it. You pay rent every month for the equipment you need just like you would rent office space. At the end of the term, you can renew or buy the equipment outright.
The benefit to leasing is that you don’t have to have a sizeable down payment. You also don’t have to have collateral. It’s easier to qualify for leasing than it is financing, and quicker, too. However, you pay for that convenience concerning cost.
If you plan to use the equipment long-term, you’re better off buying it because it will be cheaper in the long run. You could end up paying more in rent over the course of your operations than you would pay if you just purchased it outright.
These types of loans are best for new businesses that need equipment to start or expand operations. The equipment itself is the collateral against the loan. You can often get your equipment financed at 100%.
Some lenders require a 20% down payment, and the other terms vary as well. You can finance the equipment over the course of thirty-six months or stretch it out over ten years based on how much you need to borrow.
Term loans are great for established businesses who have consistent revenue but need to borrow up to one million dollars. These types of loans are paid back over a period of time similar to an auto loan or mortgage.
You can secure these loans with equipment as collateral, but some lenders will let you borrow without it or offer up other business assets as substitutes. Term loans require higher credit scores, which is why they’re typically better for established businesses rather than new ones.
Business Credit Cards
If you don’t need large equipment, a business credit card could help you earn rewards for your purchases of small equipment. They have lower credit limits than other types of financing, so you are generally restricted to about $100,000 worth of spending at a time.
That doesn’t mean you can’t use a business credit card to help supplement your large equipment purchases. The advantage of using a business credit card is the points you earn when you use it. You can earn points, cash back, and miles.
However, business credit cards have higher rates and fees, so if you can’t pay the balances off quickly, it may not be worth it for your business to apply. You will end up paying more in fees and interest rates than you would with a loan.
When trying to decide how to finance your equipment purchases, think about repayment terms like length, interest rate, fees, and options for approval. Factor into your decision the total cost of borrowing over the term of the loan as well as your needs to make the right choice for your business.
Quick Loans Direct has same day funding and many other options for equipment purchases. They can help you get approved and moving fast. Check out your options today!