When you are having cash flow issues and need equipment to run your business, the clear alternative to laying out a large sum of cash is to lease the equipment instead. But lessors will usually do a thorough credit check before letting anything leave their premises. If you have bad credit, you may face challenges when trying to lease equipment. Here are a few tips for how you might be able to lease equipment when you have bad credit.
Have a friend lease the equipment on your behalf or co-sign on the lease contract. The friend should have excellent credit because the equipment lessor will probably still have reservations knowing that someone with bad credit will be the one who is actually using the equipment.
Get positive references from past companies you have leased equipment from to assure the new company that you fully intend to pay the commitment. You also need to assure the lessor that you will take good care of the leased materials. Companies tend to assume that people with bad credit will be more reckless with how they use leased equipment.
Put a large down payment on the equipment or allow the leasing company to put a hold on your credit card for as long as you will be holding the equipment. Offer to pay at least 10 percent of the value of the equipment upfront to convince the company to lease you the equipment even though you have bad credit.
Give the lessor something of similar value as collateral on the equipment lease. Sign an agreement stating that the collateral will be retrieved when the leased equipment is returned in good condition and have the collateral appraised. Be aware that if you return the equipment in bad condition, the lessor would be able to seize the collateral and sell it in the interest of recouping the value of the equipment.
Provide the lessor with full details about where the leased equipment will be located. The longer you have been living (or doing business) at the address the better your chances of being granted the equipment lease. The lessor needs to be reasonably assured that he or she will be able to come retrieve the equipment in case of a default on payments.