Bring the vendor quote to Valeshire Financial by phone at (517) 500-5442 or through the request form; funding partners set any rate, term and down payment.
Equipment financing covers movable machines and tools, with the equipment as collateral. A loan or finance agreement leads to ownership; a lease may end with a return, a renewal or a purchase. Wiring, plumbing and other work on a building are outside this site.
At a glance
- Covers
Movable machines, tools and vehicles for work
- Collateral
The equipment being bought
- Ways to pay
Loan, finance agreement or lease
An Adrian, MI landscaping company's excavator and sod cutter, quoted as an EFA and as a loan
An equipment finance agreement (EFA) and an equipment loan both end with the business owning the machine. A loan is priced with an interest rate, and the funding partner holds a lien until the last payment. An EFA is quoted as a fixed payment schedule, and the finance company holds a security interest in the equipment.
Illustration only, invented figures. An Adrian, MI landscaping company prices a $49,400 compact excavator and an $8,500 sod cutter, $57,900 together. Financed as a 60-month loan at 10.65% a year, the pair costs $1,248.80 monthly; sixty of those come to $74,928.00. An EFA quoted at $1,268 a month for 60 months totals $76,080.00, which is $1,152.00 more than the loan.
An EFA can still be the one chosen when its paperwork, timing or end terms suit the business better. The comparison only works once both offers are written out as totals.
A Lenawee County, MI auto repair shop's parts washer and AC recovery machine, leased with a one-dollar purchase at the end
A $1 buyout lease runs for a set number of monthly payments, after which the business buys the equipment for one dollar. Because it ends with ownership, its total belongs beside a loan for the same price.
Illustration only, invented figures. A Lenawee County, MI auto repair shop leases a $4,372 parts washer and a $7,718 AC recovery machine, $12,090 together, at $357 a month for 42 months. With the $1 buyout, the lease totals $14,995.00. A loan for the same $12,090 at 11.85% a year over 42 months would cost $353.07 a month and $14,828.94 in all, $166.06 less than the lease.
If either machine had to be plumbed or wired into the building, that hookup is property work outside this site.
A Lenawee County, MI home builder's robotic layout station, leased for its use at fair market value
A fair market value (FMV) lease keeps the monthly payment low because the business is paying for the use of the equipment, not all of its price. When the term runs out, the business chooses between handing the equipment back, signing on for more months, or paying whatever it is judged to be worth at that point.
Illustration only, invented figures. A home builder in Lenawee County, MI prices a $38,200 robotic layout station, a tool that is replaced as the technology changes. An FMV lease at $835 a month for 36 months totals $30,060.00, not counting any purchase at the end, whose price is set at that point. A loan at 11.35% a year over the same 36 months would mean $1,256.96 a month, $45,250.56 in all, with the station owned outright.
The lease fits if the builder plans to hand the station back for a newer model; the loan fits if the builder plans to keep it for years.
How does equipment financing work? Pricing a kitchen line for an Adrian, MI sit-down restaurant
Equipment financing starts with a vendor quote and ends with the machine paid off. For an Adrian, MI sit-down restaurant replacing its kitchen line, the steps run like this:
- Get a written quote: here, in invented figures, a $9,850 range, two fryers for $6,400, a $5,300 charbroiler and $1,150 for delivery and setup.
- Call Valeshire Financial at (517) 500-5442 or send the request form with the invented $22,700 total.
- A funding partner looks the request over and may want the quote plus recent bank statements.
- Any offer sets the rate, term and any down payment; the restaurant reads it before signing.
- The partner pays the vendor, and the restaurant makes the monthly payments.
Illustration only, invented figures: $22,700 at 11.05% a year over 54 months is $535.40 a month, $28,911.60 in all, with $6,211.60 of interest. The gas connections and any hood or ventilation work are property work outside this site.
Does equipment financing count as debt? Two dental chairs at an Adrian, MI dental office
For loans and finance agreements the answer is yes: the dental office owes whatever balance remains and lowers it with each monthly payment. A lease is a payment obligation for its full term too. Which line of the office's books each one lands on is for its accountant to decide.
Illustration only, invented figures. An Adrian, MI dental office finances two dental chairs for $46,800 at 10.15% a year over 72 months, a payment of $870.55. After 24 payments the office still owes $34,227.10; the 72 payments total $62,679.60 by the end. The water, air and suction hookups for the chairs are property work outside this site.
How do equipment leases work? A Lenawee County, MI manufacturer leasing a forklift
A lease contract sets the payment, the term and what happens at the end, and it also assigns duties that a loan leaves to the owner. A Lenawee County, MI manufacturer leasing a $33,600 forklift reads the contract for these points:
- Whether upkeep and repair bills fall on the manufacturer or the leasing company
- The insurance the lease requires and who must be named on the policy
- What ending the lease early costs
- The end-of-term choices and how the purchase price, if any, is set
- Return conditions, such as wear limits
Illustration only, invented figures: at $712 a month for 48 months, the payments total $34,176.00 before any end-of-term purchase. The manufacturer weighs that total against buying the forklift with a loan and keeping it.
More equipment cases appear in article form: a pharmacy tablet counter, a line striper for a county contract, multi-seat strollers and a washer-extractor, two offers on a therapy laser and a truck-mount unit and the UCC filing behind it.
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