How to Qualify for 0% Interest Financing on Musical Instruments

How to Qualify for 0% Interest Financing on Musical Instruments

The difference between high quality and low quality musical instruments can be significant. Both sound quality and playability increases as the price tag goes up. For beginners and amateurs, a low cost, low quality instrument is often enough to get started. But as skill increases, musicians are going to want to invest in better gear. Unfortunately, high-quality musical instruments like electric guitars, amplifiers, amps, and pianos are very expensive. The price can be even more prohibitive if you need a large inventory of music equipment for a business.

Thankfully, you can finance musical instruments to get the gear you need. It’s even possible to get 0% musical instruments financing. However, there are limitations to its use.

We’ll look more closely at musical instruments financing, its requirements, how it can benefit you, and how you can get the best terms possible.

0% Small Business Musical Instruments Financing Options

If you’re concerned about paying a high price to finance your instruments, there’s good news: You may be able to qualify for musical instruments financing solutions with 0% interest.

Here are some common ways to score 0% financing for musical instruments:

Buy Now, Pay Over Time

Buy Now, Pay Over Time offers have become popular in recent years. While commonly used for individuals, for example, you might see a no credit guitar financing offer advertised as “buy now, pay later,” it has also come into regular use in the business lending space.

For example, Synchrony and Affirm offer buy now, pay over time options for borrowers that qualify, with payment plans varying by eligibility. Options like buy now, pay later typically have smaller limits than regular small business loans. So, for a music business with comprehensive needs, it might not be feasible to fund everything you need with a buy now, pay over time option.

Credit Cards

Another 0% musical instruments financing option is to use a credit card that offers a zero-interest introductory period. These often range from 12 to 18 months, after which the typical interest rate kicks in. Eligibility for a zero interest credit card will vary by lender, but typically they will want you to have decent credit. If you do qualify, and can pay off the loan within the zero interest phase, credit cards can be a suitable option for musical instruments financing.

Unless you have a long credit history and excellent credit score, the highest limit you will be able to get from a 0% interest credit card is likely to be around $20,000 to $25,000.

Other Affordable Musical Instruments Financing Solutions For Your Business

Remember that 0% musical instrument financing will usually cover only the instruments. You may have other business needs that you may need to finance.

These include:

• Brick and mortar store
• Other equipment besides instruments
• Marketing and other operational expenses
• Business vehicle

Some music store owners use a combination of musical instrument financing options.

Equipment Loans

While you’re not likely to score 0% financing with an equipment loan, it can get you the musical instruments needed for your operations. An equipment loan is also the easiest small business loan to get because the equipment is collateral for the loan.

Other types of equipment you can get with an equipment loan include computer equipment, other store inventory, furnishings, and a company vehicle.

Best way to qualify: While lenders prefer a credit score of 650 or higher for equipment loans and a year or so in business, some lenders offer more flexibility because the equipment serves as collateral.

Business Line of Credit

A business line of credit works similarly to a business credit card. You receive a maximum credit limit and can make purchases up to the limit allowed. But you’re only charged interest on the amount of credit you use. The benefit of a line of credit is you can use the credit on any business purchase.

Best way to qualify: Build your credit score to 680 or higher for the best interest rates and higher credit limits. Some online lenders will approve a business credit line with a lower credit score, but you’ll be charged higher interest and perhaps be given a lower credit limit.

Term Loans

A term loan can fund different facets of your music business’s operations. This includes:

• Growing or expanding your business
• Opening other store locations
• Stocking up your musical instrument inventory
• Covering day-to-day expenses

While you won’t get 0% musical instruments financing with a term loan, it offers the benefit of funding a higher limit than Buy Now, Pay Later options and most credit cards.

A term loan provides upfront funding for your business needs and has convenient monthly payments until the loan is paid off. Term loan terms and interest rates vary significantly from lender to lender and are based on your credit score and other eligibility factors.

You can get a term loan from a bank or credit union or from an online alternative loan specialist. Since, banks tend to have a more complicated application process and may have a more stringent credit approval process, many small businesses prefer alternative lenders. Alternative lending specialists have a more seamless application process and often use advanced approval processes that make financing easier to qualify for. They may also offer more flexible repayment options to meet your needs. That way, you can focus on delivering a great customer experience while having the funding you need to grow your business.

Best way to qualify: Qualifying for a term loan usually requires a 650 or higher credit score, 18 months in business, and an annual revenue of $250,000 or more.

Revenue-Based Financing

Revenue-based financing is one of the most flexible funding options for music store owners. This type of funding bases your repayments on future revenues of your business, allowing greater scalability. Revenue-based financing is only available through alternative lenders.

Best way to qualify: You can get approved for revenue-based funding even with a low credit score. However, you’ll get a better interest rate if your score is higher. A lender will usually want to see 12 months in business and an annual revenue of $250,000 or more in order to offer you revenue-based financing.

FAQs

Is 0% musical instruments financing only available for music stores?

No. Schools, professional orchestras, and professional musicians and bands may be able to qualify for 0% musical instruments financing, just to name a few other business types.

How much does it cost to open a music store?

Startup costs for a music store can range from a few thousand to several million dollars. It just depends on the size and scale of your store, whether you buy or lease your building, and how many employees you hire.

What is the typical profit margin of a music store?

Profit margins will vary depending on the products and services you sell, but you can expect a 10-15% margin as a good benchmark. Profits on musical instruments typically range from 20% to 40%, depending on your business model, but you have to figure in your costs as well, like labor, rent, utilities, and insurance.

Is there such a thing as no credit check instrument financing?

Some lenders advertise soft credit checks for musical instruments financing, but typically a hard credit check is still required when you finalize the financing. While it may be possible, you are unlikely to find reputable lenders offering no credit check musical instruments financing.

Is it better to get musical instrument financing through a bank or online?

The best lender for musical instrument financing depends on what you need and what you qualify for. A bank may have competitive rates, but an online lender may be more likely to offer you financing, and may be able to get you funding faster.

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