The Consequences of Missing Financing Payment Deadlines

Banks and lenders aren’t in the habit of giving their money away for free, and this is why most loans will feature interest rates. These rates are responsible for providing banks with profit when lending money. If a borrower was to receive $100,000 to purchase property or an asset for their business, then they will be expected to pay this amount back, as well as the interest rate on top of their monthly repayment.

Equipment finance works with a list of equipment financing categories, with lenders offering sums of cash to their customers in return for allowing the purchased goods to be used – and the borrower will agree to pay back what is owed, with interest. Even the largest sums can be fairly manageable and as most finance agencies will simply want to ensure that they receivemissed a payment their money back; they can be lenient as far as payment duration is concerned (such as yearly payments, or those longer than a decade).

But there are times when a business may not be able to pay back what they owe, and in these instances, lenders have been known to take full advantage of the law to ensure that they lose as little as possible. If just a single deadline is missed, then the lending agency will usually have an advisor get in touch with the company to find out why. If the issue can be resolved, then the consequences can be all but none existent. The ins and outs of equipment financing can determine if the lender believes that they may struggle to get their money back, however, then they will likely take action.
Things to remember.

When taking out a loan under a finance agreement, it’s important to note that any items purchased will belong to the lender in their entirety, until the full amount of the loan has been paid off. Even if five vehicles were purchased totaling $100,000 and the borrower manages to repay $60,000 – the terms will still usually state that unless the entire sum is repaid, then none of the vehicles will belong to the borrower.

This will depend on the lender, however, and is one of the main reasons why people consider hiring the services of experts; simply to ensure that these types of terms are clearly defined and to the benefit of both parties. So, what about those instances when a company relies on the assets that have been purchased, but they aren’t able to keep up with their payments?

What do you need to know about equipment financing?

In the majority of cases, a lender will try to be as lenient as possible. They will typically attempt to renegotiate payment terms to help the struggling business while ensuring that they also get their cash investment back. As a result, it’s far more likely that they will want to come to new terms and make new arrangements, but if this isn’t possible the inevitable repossession process can begin. As the term might suggest, this will involve the lender seizing goods and products that were purchased with their money.

In the long run, it makes much more sense to budget for repayments, as opposed to ending up struggling and having assets seized. Although this can be unavoidable, it is worth remembering that lenders aren’t bad institutes that want to rob their customers; they are businesses, too. As flexible as they can be about their rates and repayments, they can also act swiftly to ensure that they don’t suffer a loss.