A Definitive Guide On Machine Tool Financing

Nov 14, 2020

A Definitive Guide On Machine Tool Financing

The introduction of machine tools to the industrial sphere has enabled various sectors of India’s economy to create products with zero defects. In our country’s context, machine tools have been a key player in allowing government schemes like ‘Make in India’ to generate the desired results.

Thanks to the widespread application of machine tools across industries, India ranks 12th in terms of machine tool consumption. Industries like the automobile, construction, medical, aerospace, defence and several other players in the manufacturing industry remain primary consumers of these tools.

Installation or upgradation of new and improvised machine tools allows businesses to gain a competitive edge. The lending market thus brings various machine tool financing options that can make funding the purchase of these indispensable tools convenient. Financial institutions offer several features, terms and conditions to suit the varying needs of businesses.

Nevertheless, an ideal loan option would be the one that brings a balanced mix of features and benefits that make borrowing affordable and machine tool financing repayment convenient.

Types of Machine Tools– A Brief Overview

Depending on the type of business and scale a business operates at, machine tools can be of varying types with singular to large-scale requirements for operations fulfilment. The size and application of these tools can also vary from one business to another.

Some of the common machine tools used in different industries include the following.

  • Drill presses
  • Broaching machines
  • Hones
  • Vertical and horizontal lathes
  • Milling machines
  • Traversable and rotary tables
  • Boring machines
  • Punch presses

These are but just a few names of machine tools that have revolutionised how industries operated. Depending on the types of machine tool you require for your business, lenders provide various forms of financing.

Although there may not be a dedicated funding option, different loan products in the market can aptly serve as machine tool financing options.

So, what are these financing options? Take a look!

  1. Equipment and machine financing

It is a common funding option that businesses opt to purchase various equipment and machinery units for the venture. This form of financing allows a business to raise funds by providing the newly-purchased machinery as collateral.

Lenders bring these loans with simple machine tool financing eligibility criteria. Nevertheless, the repayment terms may not be as flexible as some other loan options.

  1. Term loans

A conventional form of financing, term loans are designed to fulfil varying funding needs of a business. Available as long, short and mid-term options, these loans are offered by several financial institutions against different machine tool financing interest rates.

Although term loans can be a viable machine tool financing option, borrowers need to stick to the repayment schedule and pay EMIs in time towards the total loan liability. Such stringent requirements can put an immediate strain on their finances. Also, availing such loans requires borrowers to possess a business vintage, making it impossible for start-ups to resort to these financing options.

  1. Machine tool leasing

Machine tool leasing is another popular funding option businesses can utilise to meet their operational requirements. Under this arrangement, businesses are allowed to utilise a given machine tool to fulfil their manufacturing or production requirements against a monthly payment of a set percentage as decided by the financier.

Nevertheless, at the end of this machine tool financing arrangement, the business must return the machine back to the provider or renew the lease terms to continue usage.

This facility does not provide machinery ownership unless the business agrees to pay a lump-sum to complete the purchase.

  1. Gold loans

An alternative financing option that can be utilised to purchase machine tools is a gold loan. It is a secured funding option that provides you with the necessary financial assistance at attractive terms like low interest rate, easy repayment options and flexible tenure.

Further, with simple machine tool financing online application process, Rupeek Fintech Private Limited makes availing the loan more convenient than ever.

Gold loans are free from any end-use restriction, meaning you can utilise the loan amount to fulfil other business requirements as well apart from purchasing the required machine tools.

A number of features make gold loans a suitable funding option as compared to others.

Gold Loans - Why Should You Avail Them to Fund Machine Tool Purchase?

  • Quick financing at the doorstep with instant disbursal

A well-known gold loan lender, Rupeek Fintech Private Limited, brings the financing option with first-in-market doorstep service. After you have made an online application through the company’s app or website, a loan manager visits your house to complete the valuation of gold. Once the valuation process and KYC registration are complete, the loan amount is approved and disbursed to your account instantly.

It takes only 30 minutes to complete the entire process, thus allowing you to address emergency fund requirements with ease. Also, the loan manager leaves with the pledged gold only when you have received the sanctioned amount in your bank account.

  • High Loan to Value

Gold loans from Rupeek also make for a suitable means of machine tool financing because of the highest Loan to Value (LTV) on offer. It thus allows businesses to raise necessary funds by pledging their gold ornaments. LTV denotes the maximum percentage at which a lender agrees to extend a loan in proportion to the value of asset provided.

  • Low interest rates

Gold loans from the lender also attract one of the lowest interest rates in the market, making the funds affordable. With attractive rates and tenure of up to 6 months, which can be extended to one year, managing the loan repayment thus becomes easy.

  • Suitable repayment options

Easy repayment options only improve the possibility of managing a loan effectively. With a gold loan from the lender, you can opt to pay only interest during the loan tenure and make bullet payment of the principal amount at the time of the tenure’s completion.

You can also choose to hold the entire repayment liability until the tenure’s end and repay in a lump sum.

  • Assured security of the pledged gold

Rupeek also ensures the security of the gold pledged with iron-clad measures. Once pledged, your gold is transported in a GPS-traceable bag up to the nearest partner bank’s branch within 3 km of your house for storage in a safety vault. The security is only reasserted with an insurance policy for the gold, which protects it until the time it remains stored in the bank.With these benefits, it is now easier to comprehend why a gold loan serves as a suitable machine tool financing option as compared to other loan funding avenues. Before applying online, you can utilise a gold loan calculator to ascertain the quantum of funds you can avail with the total value of gold at your disposal for proper financial planning.

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