Equipment loans are a form of business financing that is specially designed to help businesses acquire the necessary equipment for their business operations. These loans assist companies in purchasing assets such as manufacturing machinery, technology, computers, vehicles or any other equipment crucial to their industry.
Equipment financing is typically a secured loan where the acquired equipment serves as collateral for the loan. Most lenders offer 95% financing on the equipment cost, which can be repaid through monthly instalments. The loan is beneficial for businesses looking to avoid upfront costs of purchasing expensive equipment. Additionally, they enable companies to stay technologically competitive without significant initial capital outlay.
Equipment loan interest rates will represent the cost of borrowing funds to finance the purchase of business equipment. These rates will vary based on the lenders, borrower’s creditworthiness, tenure of the loan and more. Here are the rates offered by lenders for machinery finance:
|8.90% - 25.00% p.a.
Every business or industry requires its own unique machinery or equipment necessary for its daily operations. Equipment financing loans caters to these various businesses by offering various types of loans. These types are:
The equipment loan eligibility criteria outlines the requirements that an individual or business must meet to be considered for an equipment financing loan. Specific requirements will differ among various lenders, however, the general requirements are as follows:
Documents are an essential aspect of the application process as they provide lenders with the necessary information. This helps them assess the eligibility of a borrower to make informed lending decisions. The specific documents required will vary depending on the lenders. However, here are the general documents that lenders usually require:
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Various financial institutions offer equipment loans at competitive rates. Below is a list of lenders providing equipment loan to businesses across various industries:
|11.99% p.a. onwards
|9.00% p.a onwards
|8.25% p.a. onwards
|9.30% p.a. onwards
|9.75% p.a. onwards
|Standard Chartered Bank
|17.25% p.a. onwards
|IDFC First Bank
|7.50% p.a. onwards
|18.00% p.a. onwards
|Kotak Mahindra Bank
|8.90% p.a onwards
|18.00% p.a. onwards
|8.50% p.a. onwards
|15.00% p.a. onwards
|12.50% p.a. onwards
Read LessNote: These rates are indicative and subject to change. Always check with the bank for the most up-to-date information before making any investment decisions.
Equipment financing loans offer various features and benefits that businesses must carefully evaluate. Evaluating helps them choose the right solution that aligns with their strategic objectives and financial capabilities. These features and benefits are:
Get your loans tailored
to your specific financial
Enjoy low interest rates
starting at 8.50% p.a.
These loans cover a
wide range of asset
The equipment procured
serves as the collateral
for the loan.
Businesses may be
eligible for tax benefits
on interest paid.
Easily repay your loans at
flexible tenures of up to
Choosing between an equipment loan and equipment leasing can be challenging as both provide access to the machinery and technology required for your business. Below are the key factors to consider when choosing between an equipment loan and equipment leasing:
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The application process for an equipment loan is a simple and streamlined process. The steps will differ depending on the lenders, however, here are the general steps:
An equipment loan is a loan used for the purchase of equipment for business purposes. Borrowers take a loan to purchase assets for their business which will act as collateral for the loan. The loan will then be repaid in monthly instalments over a set tenure.
To qualify for an equipment loan, you will need to be 21 - 65 years, having a business for 3 years, with a credit score of 650 or higher. You can be an individual or corporations, partnerships, trusts, proprietorships, private firms, public firms, contractors or miners.
You can use an equipment loan to purchase cranes, bulldozers, MRI machines, X-ray machines, automobile parts, food processing equipment, printing machines, moulding machines and more.
Yes, businesses under the agricultural, manufacturing, construction, medical, printing, automobile, aviation and more commonly used equipment loans.
There are many advantages of getting an equipment loan for your business as it allows acquisition of assets without upfront costs, preserves working capital, tax benefits, and enhances business efficiency.
Yes, the equipment purchased will act as the collateral for the equipment financing loan.
The repayment term for an equipment loan can be up to 60 months.
The interest rates for equipment loans range from 8.50% - 25% p.a.
You can get anywhere between 95% - 100% loan amount based on the cost of the equipment.
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