Unsecured loans are undoubtedly the most popular type of loan in the market for vehicle and equipment financing. Without the need for collateral, unsecured loans look appealing, but are they for you?
What are Unsecured Business Loans?
Loans are a risky territory that you have to step into if you need cash flow. Defaulting on a loan can cost you a lot more than just assets—failure to pay your loan in time can even destroy your business. However, this isn’t the case for unsecured loans!
Vehicle and equipment unsecured loans aren’t as risky as getting a proper business loan since the equipment is the collateral in the agreement. You don’t have to put anything upfront, and you don’t have to put your ongoing finances in jeopardy in case you can no longer service the loan.
Once you fail to repay your loan on time, the lender will use the equipment as a way of repaying any unpaid balance. That doesn’t mean you have the leverage to not pay on time—you should still meet the repayments in time. The best part is that when you repay the loan in full, you acquire ownership of the equipment you bought!
With Carbon Neutral Finance, equipment finance maximum loanable amount is $2m and the loan term can be between one to five years. Moreover, the interest rate also starts at 6% up to 15%.
Getting an unsecured equipment loan is a good option if your business wants to invest in equipment without any significant outlay. Here are some of the benefits that come with them:
Banks are a hassle to deal with, especially when they swarm you with calls after being late by just a day on your payment. Getting an unsecured loan from independent lenders like Carbon Neutral is a lot more flexible!
Independent lenders often offer you flexible repayment agreements that meet your company’s needs. Make sure you communicate with them, make suggestions, and you might just seal a deal that works for both sides! Don’t be afraid to ask your lender to create a flexible repayment scheme that works for you.
Getting a loan from a bank can take days or even weeks before it gets approved. When you need your equipment bought as soon as possible, you don’t have the leverage to sit around until the bank finally accepts your application!
Applications from independent lenders usually take a few minutes or an hour, and all you need to submit are basic documents. You might even be able to secure a same-day loan if there’s a sense of urgency that needs to be met.
Getting your loan approved by an independent lender is also significantly easier than getting approved by the bank. The bank is going to run an extensive background check and scrutinizes you for your past endeavours. A good lender will take your company’s potential into account and will be more than willing to help you!
Though there aren’t many downsides that come with taking out an unsecured loan, there are still a few things that you should be aware of before signing that agreement!
The biggest drawback that comes with this form of financing is that it’s very limiting. As the name implies, the only thing you can buy with your loan is a vehicle or a set of equipment. Before you apply for this type of loan, make sure that you have enough money to cover the company’s other expenses!
A risk that comes with having full ownership of your equipment is the possibility that they become obsolete. This inevitability comes with a technologically advanced society that strives to make everything better and more efficient.
If you’re going to take out a large sum, make sure that it’s for something that has longevity. Get something that will last even after you’re done repaying the loan before you need to replace it.
Everything has pros and cons; weighing whether you need an unsecured equipment loan is something you must properly assess before you commit to getting one.
Come consult at https://carbonneutralfinance.com if you want to know what type of loan best suits your interests!
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Carbon Neutral Finance™ is a Fintech Bear Company ABN:82975330228 acts under a fund facilitator / commercial aggregator. This content does not constitute legal, tax or financial advice. Please contact your advisor for more information.Products, features and info shown are general in nature and may vary depending on individual situations, please refer to loan contract/offer for terms relevant to you.