Look at More Than Interest Rate When Financing Equipment

Friday, April 24 at 05:40 AM
Category: Business Banking
Sometimes small business owners ask how banks compete with the financing provided by large manufacturers and distributors of equipment. What many business owners don’t realize is there’s a cost associated with low percentage financing options. 
 
Here’s a true example from the Oklahoma City area about the cost of low interest rates. A commercial contractor went to a large manufacturer of farm and construction machinery and received a quote for 1.9 percent financing on equipment needed which he thought seemed like a rate no bank could meet or beat.
 
This same business owner met with his long-time Arvest banker, Keith Kersten. Keith asked this business owner to go back to the manufacturer to get the pricing on the units at a cash price. The pricing was significantly different on almost all backhoes this business owner needed. In fact in some cases it was 5 percent cheaper to pay cash!  
 
Arvest was over 1 percent higher than the rate of the manufacturer. However, because of the manufacturer’s cash discount, the business owner saved approximately $12,000 (over 3 percent overall savings) over the life of the Arvest Equipment Finance contract! Sometimes you just have to ask the right questions! 
 
Tags: Arvest Biz, Business Banking, Equipment Finance
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