Do I Really Need A Broker For Equipment Financing?

By Author: Belinda Darling
Total Articles: 152
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Equipment financing, like its close cousin business car financing, is not an easy beast to get to know! Even the main methods of business equipment finance do not always have obvious and apparent benefits for different financial situations. In many cases, this confusion causes borrowers to simply go for the simplest equipment finance option - but this may end up being more expensive. A finance broker is a good solution to the complexity that has developed within the finance market over the last few decades - but as with any business service, they are not ideal or necessary for everybody! Do you REALLY need a broker for your equipment financing, or is there a better solution for you? We explore the issues today.

Managing Complexity
A good business person recognizes that they cannot possibly maintain all the skills and knowledge to manage every single detail about their business operations. For complex specialist tasks, outsourcing to experts is the best business solution - and this is exactly what engaging a finance broker represents!

Equipment finance specialists help manage complexity by:
• Providing ...
... clear comparisons of the benefits and drawbacks of particular loans
• Giving you an idea of your net position with each different business equipment finance option
• Relieving you of the hassle of filling out, delivering and chasing paperwork.

Access to Lenders, Access to Preferred Rates
Equipment financing, as opposed to mortgages or simple car financing, is a far more specialist industry. Your own research may not be able to uncover all of the options available to you - a finance broker may expose you to business equipment finance options that you weren't previously aware of.

However, always remember that finance brokers deal only with lenders with whom they have an established commission relationship - this is how they stay in business! Unless you choose a reputable business equipment finance broker with access to a large range of lenders, you could actually be ignoring your cheapest equipment finance option unwittingly.

Additionally, finance brokers offer lenders the potential for high volumes of business, so they may be able to negotiate a more competitive rate than an individual could by approaching the lender directly.

Approval Issues
An equipment financing broker may be able to per-identify approval issues with your equipment loan, and find ways to work around them ... without the hassle or credit blemish of having your application rejected.

Less Knowledge, Less Power?
However, if you have some experience with financial matters, or you need to retain a good understanding of your finance arrangements within the business, utilizing a finance broker may not be the best solution for you.

While brokers are always happy to explain equipment finance benefits and drawbacks as well as their reasoning, there's no substitute for in-house, hands-on experience of the loan comparison and application process. Larger businesses or those with extensive borrowing needs or large borrowing portfolios may find that in-house arrangement of their financing needs is more beneficial in the long term.

Working with a finance broker has both inherent advantages and disadvantages. If your equipment finance needs are complex, but you will not have long-term ongoing borrowing needs, an equipment finance broker could save you time, headaches, and a substantial amount of money!