Let’s say your business needs a new set of office computers. The expected price of this new hardware is around $12,000 total for all the monitors, mouses and keyboards. After you get approval from a lender, you use that money to purchase the computers and agree to pay 12% interest. Because technology advances so quickly, the value of the computers is expected to depreciate significantly quicker than other equipment, so the lender only gives you two years to pay the loan off.
$13,440 is the total amount you’ll have to pay back, making your monthly payments $560 for two years. After it’s paid off, you own the computers.