Understand The Concept Of Low Doc Equipment Finance
Low doc equipment finance is a type of finance provided to borrowers without an extensive list of paperwork. It is common for a typical business not meeting the standards of the bank. There is certain low doc equipment finance provider, who work closely with the borrowers and lenders and ensure that the business’s unique needs are met. Overall, low doc equipment finance service provider ensures that the loans reach the borrower as soon as possible.
- Plans repayment: This type of finance is well known in the market because they are fair and offer flexibility to borrowers. Since the income streams of a small company varies drastically as compared to large organization, the low doc equipment finance provider plans the repayment schedule in such a way that it fits the entire business plan.
- Financing the desired equipment: Most of the equipment required by organizations can be financed by low doc equipment finance options. Some equipment covered under such financing options are, manufacturing machinery, motor vehicles, earth moving equipment, forklifts, trailers, compressors, computer hardware, business fit-outs, office equipment, medical equipment, coffee machines, and audio-visual equipment. For people who qualify as dentists, lawyers, and doctors, it is usually possible for them to borrow equipment that costs close to $150,000.
- Higher rate of interest: The interest rates for this financing option are usually higher as compared to the other types of loans. Even though dull doc finance options have lower risk, financers can provide competitive rates when it comes to low doc equipment finance. This is primarily because every lender wants to reduce the total risk he/she is getting into with a borrower. However, if the borrower has all the documents required for a full doc loan, he/she should talk to the finance to understand which loan option is the best alternative.
Eligibility For Low doc equipment finance
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Low Doc Equipment Finance
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The second criterion is related to the business and the partners. If the company is registered, all the current directors in the company should possess excellent credit history. If the borrower is not sure about the credit rating, he/she should thoroughly study the factors that influence the credit rating.
- Other factor determining the eligibility: One more factor that influences the eligibility of low doc equipment finance loans is the goods to be purchased. Different lenders face different situations or requirements that are more specific. Some lenders mandate the borrowers to purchase goods from a dealer while few might prefer the borrowers to purchase the goods from a private sale. In addition, the factor of goods is dependent on the overall profile of the applicant. With respect to the age of the machine, some service providers ensure that the equipment should not be older than 4 years. Few finance providers are lenient with this factor. They even may finance goods that have been used for 15 years.
Finally, the ability of the borrower to provide an asset against which the loan can be financed plays a crucial role. This factor ensures that the application process goes through without any hiccup. Usually, the lender will finance close to 70-80% of the total amount. Businesses should study the disadvantages of the low doc equipment finance option before opting for it. This is necessary because there are
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