There are so many things to consider when it comes to choosing a finance company. Finance companies usually provide leasing or hire purchase contracts to the small and other business owners. There are several types of finance companies in the market. For example, some finance companies are the subsidiaries of the major banks.
Some companies provide finance to promote marketing of their own products. A typical example of this kind of finance companies is car manufacturers. Some suppliers of the business equipments and other kind of equipments also facilitate financing. Adding to this list are the members of the finance and leasing association and some other independent houses also.
Competition is Growing Among The Finance Companies:
There has been a significant increase in the number of finance companies entering in the market recently. This is naturally resulting in fierce competition among the finance companies. Growing advertisements of the finance companies in the major newspapers is a proof of this fact. How can you judge whether a particular finance company is right for you or not? First, you should look for the reputation when choosing a finance company.
It should have a good reputation in the market and even better if it is also a member of the finance and leasing association. The second thing is that whatever kind of contract you have with the finance company, it should be in accordance with some type of written or verbal quotation.
The duration of the leasing agreement should be long enough to cover the period for which the asset is required. The finance company you are going to choose should be open enough to tell in advance regarding the penalties if any in case of early termination of the leasing agreement. Prepayment penalty is the biggest hidden cost of borrowing any loan. You should avoid companies that charge any such penalties.
In other words, you should choose a finance company that tries to hide nothing from you. You get to know every condition of the company before signing the agreement including the amount of rentals and the notice and hire periods. Moreover, also make sure that whatever equipment you are going to lease from the finance company is new.
You should not forget that when you choose a finance company, it is not a short-term deal. You cannot take it easily, because you have to maintain relationship with the company for a longer period. It will be better if you can choose a finance company that gives you the flexibility of switching between the floating and fixed rates while not charging a single penny extra for this facility.