In today’s business climate, it makes sense to protect your bottom line by choosing financing agreements wisely. But all too often, we speak to business owners who find that they’re locked into contracts with banks, vendors or private finance companies that have less-than-desirable terms. Going into your next financing contract equipped with the right questions will help you avoid a similar situation.
Consider asking these questions to uncover financial “red flags” before signing your next lease or loan contract:
- What is the term of the loan and how much is the monthly payment?
- Is there an end-of-term buy-out? If so, how much is it?
- Do I have to notify you at the end of the lease/loan to complete the buy-out? (If yes, this is a RED FLAG)
- Is there an application fee?
- Is the application fee refundable? (If not, this is a RED FLAG)
- Is there a commitment fee? (If yes, this is a RED FLAG)
- How much is the documentation/origination fee?
- Is a security deposit or interim rent required?
- Are there prepayment penalties if I choose to pay off early?
- Can I save money if I pay off early?
- Are there any fees to access account information?
- Do you have forced-placed insurance on the equipment?
- How is the pay-off amount calculated? (If future interest or fees are included, this is a RED FLAG)
Remember, when signing any kind of contract or obligation, the more information you have, the better decision you will make. You should always ask detailed questions and work with an organization you can trust.
Even if you think you’re comfortable with the contract you’re about to sign, it may be wise to call Professional Solutions Financial Services’ Lease/Loan Comparison Hotline for a no-obligation comparison. We’ll review any contract you’re considering, compare it to our terms, and point out the differences.