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Independent machine intelligence · Research before the decision
THE MACHINEBLUE BOOKResearch · Market · Ownership
MBB Explains · Film 04

What a Higher Rate Does to the Same Borrowing

Same borrowing. Same term. Rather different bill.

Open the machine financing resourcesMore MBB Explains films
MBB Explains · 57.7 secondsOriginal MBB animation · English captions

About this film

Same borrowing. Same term. Rather different bill.

Bronto compares two hypothetical rates and asks what remains after the machine has paid its way.

Example assumptions

Compare the same $100,000 principal over 60 monthly payments, fixed nominal annual rates 2% and 12%, full amortization, no fees or balloon. These are not current market-rate or eligibility claims.

Educational boundary

General educational information only, not an offer of financing, a recommendation to borrow, or individual financial, tax, legal, engineering or safety advice. All dollar amounts are USD. Bob, the finance representative and their situations are fictional. Numerical examples are hypothetical, not current offers, market benchmarks, normal rates, quotes or promises of approval or return. Eligibility, terms, fees, tax treatment, ownership rights and laws depend on the actual agreement, jurisdiction and circumstances. MBB is an independent information resource, not a law firm, and is not acting as your lender, broker, attorney, accountant, financial adviser or site engineer. Consult appropriately qualified professionals and read the actual written terms before deciding. Commercial equipment credit does not automatically receive consumer mortgage protections.

An MBB Explains short, narrated by Bronto. Fictional illustrations turn machinery questions into something a little easier to understand.

Independent machinery knowledge. Understand the numbers before deciding.

Original MBB animation with synthetic Bronto narration. Narration: synthetic Bronto voice. The film uses English captions as a separate track, so they can be turned off.

Read the complete transcript

Bob’s fictional offers cover the same machine and borrowing. Two percent or twelve. Apparently the second lender would also like a machine, funded by Bob. On a hundred thousand dollars over sixty months, twelve percent costs roughly thirty three thousand five hundred dollars in interest. At two percent, it is about five thousand two hundred. That is roughly twenty eight thousand three hundred dollars more leaving the business. Same principal and term, fixed annual rates, no fees or balloon. Higher financing costs reduce the return left for the owner. Test expected cash generation after operating costs against repayments, including a slower sales scenario. Expensive money can still fund worthwhile work. Optimism, regrettably, is not a repayment method. Explore Machine Blue Book. General education, not individual advice.