Unveiling the Truth: Busting Equipment Finance Myths

Unveiling the Truth: Busting Equipment Finance Myths  
 
When it comes to financing equipment, there are a number of misconceptions that can cloud judgment and lead to less-than-optimal decisions, which can in turn impact your bottom line. These misconceptions often deter businesses from exploring financing options that could otherwise be highly beneficial, so understanding the realities is crucial for making informed decisions that align with business goals and financial strategies.  
 
In this blog, we will debunk some of the most common myths surrounding equipment financing – from the necessity of collateral to the true cost of financing options. By dispelling these myths, businesses can better leverage financing options to support their growth and operational efficiency.  

Myth 1: “Property or other collateral security is needed for IT equipment financing credit approval.”  
 
Reality: Generally, additional security is not required, and DLL shows this every day with credit approvals for network print security, employee devices, and video conferencing – most solutions found in the office. The leased asset itself is DLL’s security.  
 
Michael Poole, Business Development Manager for DLL’s Workplace Solutions business shares, “Our credit assessment is more focused on the quality of our end customer.”  
 
For government and enterprise customers, DLL runs credit checks focused on the customer’s financial position. For profitable organizations with solid balance sheets, this is generally enough to issue a credit decision. For small and medium businesses, DLL tends to supplement credit assessments by approving with a director or shareholder guarantee. In both instances, DLL does not seek security over other assets or property.  
 
“The absence of additional security requirements is great, as customers can secure a quick decision from DLL and place the order for the new solution,” Poole adds.  

Myth 2: “The finance option with the cheapest term payment is always the best choice when financing equipment.”  
 
Reality: Always look beyond the monthly payment and evaluate the total cost of ownership. While lower-term payments might seem attractive, it’s crucial to consider the costs at the end of the rental period. Unexpected costs can arise, making transparency from providers essential to anticipate costs accurately – understanding all obligations and potential financial impacts is key to making an informed decision.  
 
“For more than 25 years, I've seen clients decide on finance solutions based primarily on the amount of rental paid during the term, without much consideration for what the cost might be at the end of the rental,” says Andrew Jane, Channel Relationship Manager for DLL’s Tech Solutions business. “I always advise that in addition to considering the rental payments, it's important to explore any potential charges at the end of the term and plan accordingly to minimize them. This way you can make a well-informed decision on the best rental option for your needs.”  
 
It’s more than simply asking the right questions, but about ensuring the providers are clear about all potential costs.  

Myth 3: “Financing is only for businesses that can’t afford to buy.”  
 
Reality: Businesses of all sizes use financing to maintain liquidity while still investing in growth, and financing is a strategic tool used by businesses to manage cash flow effectively. It allows companies to keep their cash available for other investments, such as expanding the workforce, marketing, or developing new products. Asset finance is a key part of many businesses’ financial strategies, providing flexibility and control over cash flow, as well as the ability to acquire essential equipment or technology without tying up capital in depreciating assets.  
 
“It’s important to understand financing isn’t a lifeline for struggling business,” notes Hannah Barraclough, Account Manager for DLL’s Tech Solutions business. “In fact, many companies use it as an integral part of their financial strategy. This approach enables them to stay agile and responsive in a competitive marketplace.”  

Myth 4: “You lose control over assets when you finance.”  
 
Reality: “Financing does not mean losing control of your assets. With the right structure and with the support of experienced professionals, you can maintain control while optimizing your assets’ performance,” notes Amanda Saunders, Vendor Relationship Manager for DLL’s Tech Solutions business.

In addition, digital tools help businesses leverage the best possible use of finance. These tools provide transparency and management capabilities that help you remain in control of your financed assets.  

Unlock the true potential of equipment financing  

At the end of the day, understanding the realities behind common equipment financing myths is essential for making informed and strategic financial decisions. By debunking these misconceptions, businesses can better leverage financing options to maintain liquidity, manage cash flow effectively, and invest in growth opportunities without tying up capital in depreciating assets.  

Whether it’s realizing financing is a strategic tool for all businesses, recognizing additional collateral is often unnecessary, or evaluating the total cost of ownership beyond just the monthly payments, businesses can make smarter financial decisions that align with their goals and enhance operational efficiency. Embracing the true benefits of equipment financing can ultimately support your business’s growth and success in a competitive marketplace.  

With more than 50 years behind us, DLL understands the unique requirements of our partners worldwide, offering proven solutions that empower businesses to thrive. To learn more about our financial solutions and how they can support your business during this transition, explore DLL's comprehensive offerings here.   

Disclaimer: This document is provided for general information only. You should seek independent legal, financial and tax advice that takes into account your individual circumstances. Financing rates, terms, and taxes may vary from country to country. Actual financing terms and conditions are subject to credit approval by DLL and will be based on DLL’s review of the creditworthiness of the customer, prevailing interest rates, and other factors. All financing is in DLL’s sole discretion. Credit criteria, fees, terms and conditions apply.