The Benefits Of Computer Equipment Loan Products
If you are a business owner, you must constantly think of ways to improve your business operations. One of the simplest ways is upgrading your computer hardware. If you need more computers or want to replace obsolete computer equipment, you may want to consider looking for computer equipment financing. There are many companies offering computer equipment financing to businesses, nonprofits, schools and charities. Therefore, you can easily find the most suitable lender for your needs. All you need to do is search the web for the right financier. You can even work with a loans broker to identify the best lender for your needs.
What to Look for in Computer Financing
i) Low Down Payment
Most financiers usually require a small deposit to approve equipment financing applications. This can range from 1% to 20% or thereabouts depending on the credit rating of the business as well as its financial position. Ideally, you should look for a lender with the lowest down payment requirement because you do not want to set aside too much capital for the down payment.
ii) Low Interest Rate
You have to compare the interest rates charged by different lenders before making a decision. This is because the rates of interest charged by different lenders on computer equipment financing should be compared. This will help you save a lot of money. Please note that your credit rating and financial position will have an effect on the rate of interest you pay.
iii) Loan Term
The term of the computer financing loan should be checked. You do not want a loan that will strain your business financially. The ideal loan should have a long repayment period to reduce the amount of money you will be required to pay every month. This means that you can acquire high-end computers, servers and accessories without feeling the pinch.
Benefits of Equipment Financing
1. Tax Benefits
There are several tax benefits you can enjoy when you use equipment financing to acquire new computer equipment. For starters, the loan payments are tax deductible expenses. This means that your tax bill will reduce when you acquire new equipment. Secondly, the depreciation of the computer equipment will be counted as an expense, thereby reducing your taxable income. The end result is a lower tax bill. This means that in addition to acquiring new computers, servers, printers, network switches and other computer accessories, you will also reduce your tax bill. Please note that you can claim the full value of the computers as a tax deductible expense even before you finish servicing the loan.
2. Frequently Update Computer Equipment
With equipment financing, you can upgrade your computer hardware regularly based on your company policy. For instance, if you decide to adopt straight-line depreciation where computer equipment depreciate at the rate of 25% annually, you can upgrade computers every 4 years.
3. Less Upfront Costs
When you buy computers using equipment financing, you will only need to pay a small fraction of the total cost as the down payment. This can be around 5% of the total value, depending on the financier you choose. If you require equipment worth $50,000, you may only be required to pay around $2,500 to get the equipment you need. As a result, you will be able to free up a lot of capital for other important uses.
It is important to note that if the terms and conditions that come with a computer financing loan are not favorable, it may not make much sense to use financing. For instance, if the interest rate is unreasonably high and the loan term is short, you should think about buying the equipment on a cash basis. Alternatively, you should look for a better equipment financier.