The Credit Preview for Equipment Financing and Leasing

Many companies have been affected by the fluctuations in the economy the last couple of years. Sales would surge one month, completely go flat the next and it has been difficult for many of us to manage cash flow and the repayment of debt. Company and small business credit has taken a hit and damage has been done, yet we still push forward to improve our businesses and try to grow them into the future. The situation makes us hesitant to take on new debt or try to finance new equipment even though it is absolutely necessary if we are to survive. New equipment will allow us to offer the latest product or services or simply keep up with the growing market trends in our industries.

It’s time to apply for that new machine but we cringe at what the procedure might reveal. A solid solution which many progressive finance companies are offering is called the Credit Preview; it is a step which can take a lot of pain out of the application process. A preview doesn’t cost you anything and will provide valuable information on the condition of your company.

The Credit Preview entails taking your basic minimal business and financial information and reviewing it to determine if there is good potential for a finance approval without requiring all of your tax returns, financial statements, debt schedule, etc. It will save you time, stress and energy since the preview will offer quick feedback on the chances of getting approved. Finance companies understand it doesn’t make sense to dig out 2-3 years of financials if your business has no chance for the type of approval you’re wanting.

A standard Credit Preview only requires the following:

1) Credit Application – should be completely filled out, legible and be sure to sign

2) 3 months of current bank statements – all pages should be included since the underwriter is trying to determine the money coming into your business

3) Vendor Quote or Proposal detailing how much equipment, labor, etc. is involved. The underwriter wants to see how much “soft” costs like labor and consultation is part of the purchase as opposed to “hard” costs like equipment and machines.

That’s all that is needed. The Credit Preview process will provide a much better analysis than those online “quickie” finance credit reviews which only checks your credit score; the preview checks 8 different areas to get a true picture of where you stand and how to move forward. Even with damaged credit, at least you will know some of your alternatives.

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Stop Escalating Credit Card Interest Rates

The promotional rate lasts only a limited period of time or till a late or missed payment is registered. When this happens, the interest rate increases immediately, generating unaffordable interests that worsen the debtor’s situation.

This can have terrible consequences both on the finances and credit score of the applicant because as interests accumulate, the minimum payments grow (or the loan payments become all due immediately) making it impossible for the debtor to repay the amount owed. This generates further damage to the credit report as negative inputs keep getting recorded into the debtor’s credit history.

Watch Out For The Triggers

The main reason why escalating rates have such terrible consequences on people’s finances is that the results are not expected. Thus, people tend to spend money with credit cards or take loans without reading the fine print of the contracts thoroughly. This implies that they do not know which actions can trigger the rate escalation and so, they are continually at risk of an increase on the interest rate charged for financing credit card and loan balances.

In order to justify such growth on the interest rate charged, lenders tend to include different delinquencies as causes for the increase. For instance, a late payment can easily double the rate for financing the unpaid balance and a missed payment can block further financing and triple the rate. Some creditors even make the whole debt immediately due when some of these delinquencies occur.

Avoiding late payments or a missed payment is not always enough though. There are several other actions that can trigger the rise like spending more than the credit limit established. Moreover, there are certain credit card issuers that will trigger the rise by the mere pass of time. This is concealed as a promotional period on the credit card contract.
After the six month or twelve month period has ended, the rate automatically rises and interests start accumulating.

Getting Used To Financing The Balance With The Promotional Rate

The greatest problem with this kind of products is that people get used to the promotional rate and do not contemplate the possibility of an increment on the rate. Thus, they keep spending and carrying balances from one month to the other and when the increase strikes, they are not prepared for the results. Interests build up adding up to the already high balance and sometimes even the minimum payments become unaffordable.

The consequences can be catastrophic: accounts can be charged off and blocked, all payments can be set to be due immediately, penalty fees can be charged, credit score drops rapidly as negative inputs keep accumulating on the credit report, etc. That is why people need to be careful with escalating interest rates and pay special attention to the fine print of financial product’s contract

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