One of the first things that a business should do when it comes to expanding the business is to buy new tools and equipments. All the other things can wait- your cabin could do without an AC for another year and you could spend less on that extra packing material. However, the better the equipments in your company, the greater is the quality of the products. Better equipments might cost a more initially but in the long run they will drastically help bring down the production costs of the business.
It would be possible to make better quality products in a much less span of time and also reduce the number of hands you use at work, thus saving a considerable amount on the salary that one would have otherwise had to pay for them. Moreover, there would be less scope of human error and that would make your finished products superior to that of your competitors and that is bound to give you an edge as you would be able to charge higher than them. True connoisseurs would not mind spending on products that are really good and it would only help generate more revenue in the long run.
While applying for equipment financing, there is no need for the businessman to have prior working relationship with the lender. In other kinds of loan, one would first have to apply for a credit card even if one does not need it, or have to go to various people and solicit them for crowdfunding. If one does have such contacts or if it is not possible for the businessman to apply for a credit card and he does not want to put up with the charges, then these loans cannot be availed. Whereas making a simple online application is all it takes to obtain an equipment loan from a bank or an NBFC like Bajaj Finserv.
It is possible to get higher loan amount while approaching a bank or an NBFC rather than opting for any other medium to get the loan. This is because, buy brand new high tech equipments will definitely not be cheap and it is not possible for friends and family to raise that kind of money. And if one does not have a high credit card limit, then that avenue will not work out as well. Tp finance a growing business with all the new equipments will require a larger sum which only a bank or an NBFC like Bajaj Finserv will be able to pay you.
The machinery finance would most likely be treated as a business loan and the machinery loaninterest rate are mostly between 14% and 16%. Some credit card companies might want to lure you with lower interests on their credit card loans but there are often hidden charges which come as a big surprise later on. While banks and NBFCs often have charges like processing fees, they will also go through the income details, tenure of the loan, interest paid on insurance and other sources of income to finally fix your EMI.
There can be a world of difference when it comes to the processing charges of the loans. They can range from anywhere between 0 and 2.50% of the total loan amount. The fee could make a considerable difference depending on the loan amount. It is good to approach a financial advisor if one is new at this and they will advise you on the right course of action when it comes to applying for a equipment loanand chalk out a good repayment plan.