A loan used to purchase equipment where the asset often serves as collateral.
For example, a plumbing company borrows $85,000 through an equipment loan to purchase a new service van, with the van serving as collateral. The loan is repaid over 5 years at $1,650 per month, and ownership transfers fully to the business once the final payment is made.
Why it matters: It provides ownership of the equipment from day one (similar to an Equipment Finance Agreement - EFA), building equity in the asset while paying it down.
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