Financing new vs. used equipment
New equipment is usually the simplest to finance because its value is easy to establish. Used equipment can be financed too, but some lenders limit the age of the equipment, offer shorter terms, or ask for an inspection or appraisal. Buying from an established dealer is typically smoother than a private-party sale, where lenders may need extra steps to confirm the seller owns the equipment free of liens.
Before buying used, weigh remaining useful life against the financing term. A loan that outlasts the machine leaves you paying for equipment you have already replaced. Ask the seller for maintenance records, and factor likely repair costs into your monthly budget alongside the payment.
Reading a lease: $1 buyout vs. fair market value
Equipment leases are not all alike. A $1 buyout lease works much like a purchase: payments are typically higher, and you own the equipment at the end for a nominal amount. A fair market value lease usually has lower payments, but if you want to keep the equipment at the end you pay what it is worth then, which may be more than you expect. Some leases use a fixed purchase option in between. Tax and accounting treatment can differ, so check with your tax professional.
Read the end-of-lease terms closely. Look for notice deadlines, automatic renewal clauses that extend payments if you miss a notice window, return shipping and condition requirements, and any fees at termination.
What speeds up an equipment financing approval
Get a written quote that lists the make, model, year, condition and price, along with the vendor's contact information. Have recent bank statements ready, and for larger amounts, expect lenders to ask for tax returns or financial statements.
Ask early whether the lender will finance soft costs such as delivery, installation, training and software. Some do and some do not, which affects how much cash you need at closing. Lenders also commonly require insurance on the equipment that names them as loss payee, so contact your insurer before funding to avoid a delay. Down payment requirements vary by lender and credit profile, so ask about them before you commit to a delivery date with the vendor.