Top 5 Mistakes to Avoid When Applying for Equipment Financing

Getting the right equipment for your business can feel exciting and overwhelming at the same time. Equipment financing is a great way to make those big purchases more manageable, but there are some common pitfalls that could turn a good opportunity into a headache. Let’s break down the top five mistakes to avoid so you can make smarter decisions and set your business up for success.

1. Not Knowing Your Numbers

Before you even think about applying for equipment financing, it’s crucial to know where your business stands financially. Many lenders will look at your credit score, cash flow, and overall financial health to decide if you qualify. If you’re not prepared, you could:

• Overestimate what you can afford: Without a clear understanding of your budget, you might take on a loan with payments that strain your cash flow.

• Miss out on better financing terms: Lenders offer better rates and terms to businesses with organized financials and good credit.

• Face rejection due to unresolved financial issues: Overdue debts or errors on your credit report could hurt your chances.

How to avoid it:

• Review your credit report for errors and fix them immediately.

• Gather key financial documents, including income statements, balance sheets, and bank records.

• Pay down outstanding debts or address credit issues to boost your financial health.

2. Not Shopping Around

Not all lenders are the same, and going with the first option you find might mean settling for higher interest rates or less favorable terms. Comparing lenders can save you money and stress in the long run.

How to avoid it:

• Explore different types of lenders: Look into banks, credit unions, and financing brokers like 1187 Lending.

• Compare key terms: Evaluate interest rates, repayment schedules, loan amounts, and additional fees like origination charges.

• Find industry experts: Work with a lender who specializes in your field to ensure they understand your business’s unique needs.

3. Only Looking at the Monthly Payment

It’s tempting to focus on how affordable the monthly payment seems, but there’s much more to consider. The total cost of financing can include interest rates, fees, and penalties that add up over time.

How to avoid it:

• Request a full cost breakdown: Ask for an itemized list of all costs, including interest, origination fees, and prepayment penalties.

• Calculate the total cost of the loan: Add up all payments over the life of the loan to see the full financial picture.

• Work with transparent lenders: Choose a broke like 1187 Lending that’s upfront about all costs, so there are no surprises.

4. Picking the Wrong Financing Option

Did you know there are different ways to finance equipment? Choosing between loans and leases can have a big impact on your business’s finances and flexibility.

How to avoid it:

• Understand your options:

  • Loans: Provide ownership of the equipment after repayment but may require higher upfront costs and longer commitments.

  • Leases: Offer lower initial costs and shorter terms, but you may not own the equipment at the end.

• Align with your goals: If you’re looking for long-term ownership, a loan might be better. If you need flexibility or short-term use, consider leasing.

• Discuss with an expert: Consult with a trusted lender or broker to evaluate which option suits your financial goals.

5. Not Reading the Fine Print

Signing a contract without fully understanding it can lead to unpleasant surprises. Hidden fees, restrictive clauses, or unclear terms might end up costing you more than you expected.

How to avoid it:

• Read every detail: Carefully review the terms and conditions of your financing agreement, even if it seems tedious.

• Ask questions: Don’t hesitate to ask your lender to clarify anything that doesn’t make sense.

• Choose a transparent lender: Work with companies like 1187 Lending that prioritize clarity and honesty in their agreements.

Why Work with 1187 Lending?

At 1187 Lending, we make equipment financing simple, fast, and stress-free. Here’s why businesses like yours trust us:

• Fast Approvals: We know time is money, so we’ll get you an answer quickly, often within 24-48 hours.

• Tailored Options: Whether you need $50,000 or $3 million, we have financing solutions that fit your unique business needs.

• Industry Expertise: With over 10 years of experience in transportation and other industries, we understand what works and what doesn’t.

Let’s Get Started

Avoiding these common mistakes can save you time and money while helping you secure the equipment your business needs. Ready to make your next move? Contact 1187 Lending today to explore your financing options and take your business to the next level. 

FAQs About Equipment Financing

Q: Can I qualify for financing with bad credit?A: Yes! Some lenders, including 1187 Lending, offer options for businesses with less-than-perfect credit.

Q: How long does it take to get approved?A: Many applications are processed within 24-48 hours.

Q: Can I finance used equipment?A: Absolutely! Financing for used equipment is a common option.

Don’t wait—get the equipment you need to grow your business today. Reach out to 1187 Lending to get started!