Leasing vs Bank loan

With any equipment acquisition, your business has a few options to consider: cash, credit card, bank loan or a lease. Paying cash means you will have to allocate a large, upfront sum to equipment which may become technologically obsolescent in a few years. Credit cards tend to have very high interest rates, which dictate spending as much on paying off interest than the equipment itself – plus eats away at your credit lines like a bank loan.

Below is our comparison.

Ownership of the Equipment

  • Lease: Rivieres Finance Limited “leases” the equipment to the customer over a specific period at a fixed rate monthly payment ranging in term from 36-60 months.
  • Loan: Customer owns the equipment and holds legal title throughout the loan period paying interest over a specific period (interest rate may fluctuate) as determined.

Collateral

  • Lease: The equipment serves at the collateral to secure the transaction. Leased equipment is taken in the event of a default by customer.
  • Loan: Bank may require the customer to pledge current or fixed assets for collateral based on customer’s credit. If default by customer occurs, equipment acquired through loan and additional current/fixed assets also seized as collateral.

Interest Rates

  • Lease: Rivieres Finance Limited provides fixed rate financing – your monthly payment will not change during your selected lease term (36-60 months).
  • Loan: Bank credit lines are typically short-term funded, which means you run the risk of the interest rate going up throughout the loan term.

Down Payment

  • Lease: Rivieres Finance Limited doesn’t have any down-payments .
  • Loan: Banks may require a larger down payment (20% of equipment cost) based on time in business, credit quality or other factors.

Qualified Equipment

  • Lease: A lease can finance equipment and  software (tracking, insurance, maintenance etc.).
  • Loan: A loan can pay for capital needs including sales finance, inventory finance and business expansion.

Credit Lines

  • Lease: A lease does not affect your credit lines as it is funded through Rivieres Finance Limited.
  • Loan: A loan or credit line may affect your other operations/spending by limiting available dollars through that bank line