What is Collateral? And Why Does it Matter?

Collateral is an asset(s) a lender accepts as security for a loan, finance, or lease. It is something you would commit to guarantee a loan. Almost all equipment, vehicle, or home loans will require some sort of collateral assets.

Loan collateral is purely for the protection of the lender. The lender wants to ensure you will pay for the loan or lease they are providing to you. Thus, if you default on your payments, it is possible that the lender may attempt to repossess an asset or put a lien on it.

The more confidence you can give the lender in your ability to pay back the loan, the more likely you will get approved with better terms.

So how does collateral work in equipment financing and equipment leasing? Let’s explore…

Understanding the Pros and Cons of this Popular Financing Option

In the market for new or used equipment? Maybe your business is in a growth cycle, changing strategies or replacing equipment that is past its prime.

Whatever the reason, you’re likely thinking about financing. Should you lease or buy? What financing strategy will prove most affordable—and help you stay flexible for the future?

Getting a clear picture starts with comparing the two basic financing types. Leases and loans both have a lot to offer. You can optimize your return on investment by identifying the format that best suits your business needs.

How to Evaluate Your Lease and Make the Best Choice for Your Business

Financing can be confusing and, yes, kind of boring. It does pay to understand a few things though, especially when it relates to saving on your monthly lease payments.

Give yourself an advantage by understanding the breakdown of monthly payments. There are a lot of moving parts in a lease. If you just compare payment amounts, you may not be getting the full picture.

Your lease term, end of lease agreement, inspection or transport fees, down payment and interest rate all go into determining your monthly payment. Let’s take a closer look at the factors that go into determining your monthly payment.

Leasing Can Minimize Your Upfront Costs and Offer Surprising Flexibility

Dump trucks and dump trailers are expensive. Even used dump trucks can set you back over $100,000—easily making cash purchase difficult for most owner-operators. You need the dump truck to get the contracts to pay for the truck.

The good news? There are more financing options than you might think.

Traditional bank loans are not the only way to finance new and used equipment. This article will lay out 7 ways leasing can change the financing game.

Answers to Your Questions About this Common Form of Business Financing

Equipment leasing is a financing agreement in which business equipment is purchased by a leasing company (lessor) and rented back to the business owner (lessee) for a prearranged length of time at a flat monthly fee. At the end of the lease term, the lessee may either buy out their lease for $10 or 10% determined at the start of the lease, trade up for a newer model, or close the lease by returning the equipment.