Secured against the machine, or not
An equipment loan is secured: the machine is hypothecated to the loan provider and cannot be sold until the loan is repaid. A business loan is usually unsecured, so the loan provider relies on your credit and cash flow. Security lowers the loan provider's risk, which is why equipment loans commonly price lower and run longer. The trade-off is that a default puts the machine at risk, so only borrow what the machine's income can repay.
Side by side
| JCB equipment loan | Unsecured business loan | |
|---|---|---|
| Security | The machine is hypothecated | Usually none |
| Rate | Usually lower | Usually higher |
| Amount | Tied to the machine's price and margin | Set by cash flow and credit |
| Tenure | Up to 5 to 6 years at the loan providers on this page | Often shorter |
| Use of money | Only the machine | Any business purpose |
| Speed | Needs invoice and registration | Can be faster |
General pattern, not a promise. Individual loan providers differ.
When each makes sense
Choose the equipment loan when you are buying a specific machine and the margin is within reach. Choose a business loan when you need working capital as well, when the machine is too old or not registrable for a loan provider, or when speed matters more than cost. Do not use an unsecured loan to cover a machine's whole price if an equipment loan is available, because the cost difference over several years is large. Compare both on the total repayable amount in the Key Fact Statement. For the wider picture, see business loans and the bank comparison tool.
Frequently asked questions
Should I use a business loan to buy a JCB?
Usually an equipment loan is cheaper and longer, because it is secured by the machine. A business loan can be faster and flexible, but compare the APR and the total repayable amount.
Can I get a collateral-free JCB loan?
Loan providers on this page describe their construction equipment loans as secured by the machine. Ask about any collateral or guarantor, which depends on your profile and policy.
Is the rate lower on an equipment loan?
Usually, because the machine is security. The exact rate depends on the loan provider and your profile.
KhatuLoans is not a loan provider and is not paid by the loan providers named here to rank them. Rates, fees and eligibility change; always confirm with the loan provider. Read our editorial policy and how we make money.