Vending machine financing

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Page written by Alastair Woods. Last reviewed on October 30, 2024. Next review due 2025.

Vending machines are the stores that never close. Open 24/7 for the sale of food, drinks, candy, toys, and more, they’re a fast and convenient way to buy the things we need.

However, modern vending machines can cost anywhere from R3,000 to R5,000 per unit depending on how many bells and whistles they carry. This is enough to put a major dent in any income stream. But don’t be alarmed. There’s an answer to this problem: Vending machine financing. Pay for the equipment as you use the equipment. Give your vending machine business the machinery it needs without hurting cash flow.

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What is vending machine financing?

Vending machine financing – also known as equipment financing – is a type of business loan used to support the purchase of new or used vending machines. This type of financing gives business owners an alternative way to pay for one or more machines without putting strain on working capital by buying vending equipment with cash

Top tip: If you’re thinking of starting your own vending machine business, get the inside scoop with Swoop’s All-Inclusive Guide to Starting a Vending Machine Business. Find out all you need to know before you take the plunge.

How does vending machine financing work?

Although vending machine finance may come with many different names, there are essentially only two ways to buy a vending machine if you’re not paying with cash:

Finance (also known as a vending machine loan)

Vending machine finance is a straightforward business loan. You make a down payment on the equipment and then pay off the balance of the purchase price, plus interest, with regular payments over a fixed term contract. The equipment acts as security for the loan. When the agreement comes to an end, the machine is paid for and yours to keep.

Advantages of a vending machine loan

Own the equipment outright when the contract ends
Add the machinery as an asset to your balance sheet from date of purchase

Disadvantages of vending machine loan

Higher monthly payments because you are paying back the total equipment price

Lease

A vending machine lease is really a long-term rental agreement. Because you are only financing some of the purchase price, leasing typically has lower monthly payments than a finance/loan. With a lease, you make a down payment and then pay a regular sum plus interest each month to use the equipment. At contract end you can either give the machine back to the lender, renew the lease at a different cost per month, or buy the vending machine for the fair market value – this is commonly known as a ‘balloon payment’.

Advantages of a vending machine lease

Lower monthly payments
Option to buy the machine or lease a newer unit at contract end can give you better financial flexibility and/or a more modern vending machine

Disadvantages of a vending machine lease

Balloon payment could be more than the machine is worth at contract end
Becomes a liability on your balance sheet

Do I qualify for vending machine financing?

Qualifying for vending machine financing is determined by three key factors:

Strength of your personal/business credit. Most lenders will want a good credit score along with ‘depth’ – which means a long history of paying your bills on time.
The length of time your business has been operating. Longer history improves your chances of loan approval.
Down payment: It’s possible to get vending machine financing with no deposit, but generally, the more you offer to pay at signing, the better your chances of loan approval.

Typically, you will need to provide a preliminary bill of sale for each machine you are seeking to buy or lease. The lender may also ask to see your business bank statements and other financial records. Note that some lenders may set an age limit on used machines. Additionally, it is unlikely that you will be able to get financing if the contract exceeds the estimated useful life of the equipment.

Top tip: Even if you have bad credit, or have been turned down elsewhere, it may still be possible to get the vending machine financing you need. Contact Swoop today to discuss your situation with a bad credit expert.

How do I apply for vending machine financing?

You should shop around for different financing offers before settling on a deal. You can do this by approaching banks, credit unions and online lenders one by one, or you can use the services of a loan marketplace that will introduce you to a choice of excavator financing deals from different lenders. Some marketplace platforms can also give you advice and help you with the application process. This can be especially useful for business owners who have never taken out a vending machine loan before.

What you’ll need:

Vending machine details including price and details of seller
Your business details and financial records as required
Preferred type of financing – loan or lease
Contract length request

What credit score is needed for vending machine financing?

Most lenders will want a minimum personal score of +640, although, with some online lenders, it may be possible to get vending machine finance with a score in the mid-500s.

Get started with Swoop

Working with business finance experts can make all the difference when applying for vending machine financing. Contact Swoop to discuss your borrowing needs, get help with your application and compare top-quality vending machine financing from a choice of lenders. Get the essential equipment you need without putting strain on cash flow. Register with Swoop today.

Written by

Alastair Woods

Alastair is South African and has a depth of experience in small business financing and strategy. He has led the launch and development of several successful ventures related to fintech, biotech and agriculture. Alastair studied economics and finance at the University of Cape Town, and then went on to complete his Masters at the University of Edinburgh.

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