What is a conditional sales contract?
Under a conditional sales contract, you agree to buy the equipment over time and make all the installment payments over the term of the contract. You have full right to possession and use of the property while you’re making payments, and legal ownership of the equipment transfers to you upon full and final payment under the contract. It’s a “conditional” sales contract because the sale of the equipment to you is conditioned upon you paying the full purchase price over the term of the contract and performing the other conditions within the contract.
How is the payment amount under a conditional sales contract determined?
Your total purchase price for the equipment under the conditional sales contract combines the equipment cost, sales/use taxes, third party expenses, finance charges and other costs related to purchasing the equipment. This total purchase price is spread over the term of your contract to create a stream of payments that determines your installment plan. A conditional sales contract is NOT a simple interest loan, like an auto loan, where a daily or annual interest rate is charged on the “principal” (i.e., the amount owed on the loan) during the time (or for the number of days/months/years) you have had the loan.
How is a lease different from a conditional sales contract?
A lease is essentially a long-term rental agreement. You are the “lessee” and you get to use the equipment in exchange for making periodic payments to Stearns Bank (the “lessor” or “owner” of the equipment) for the term of the lease. Under a lease, you agree to make a stream of periodic payments for the full term of the lease. Because lease payments are calculated as a stream of payments, they are not broken down into principal and interest like a business or auto loan or home mortgage.
If I lease the equipment, will I have the option to “own” the equipment?
Yes! At the end of the lease term, you typically have the option to return the equipment, renew the lease or purchase the equipment for an amount set in the lease. If you exercise an option to purchase the equipment under a lease, you will become owner and title to the equipment will transfer to you.
If I have a credit approval, does it expire?
Your credit approval is good for 90 days from the day we review your credit report.
What is equipment protection?
The equipment we finance must be insured. If you add the equipment to your existing insurance policy, we will need proof of insurance listing Stearns Bank N.A. as the loss payee (and additional insured, in some cases). If you do not add the equipment to your existing policy or provide us with proof of insurance, we will insure the equipment under our own equipment protection insurance and pass the cost along to you. However, this insures only the equipment and our lender interest in the equipment – it does NOT provide liability coverage.
How can I make payments?
For your convenience, Stearns Bank offers a number of payment options, including: automatic payments, online, over the phone, credit card, bill pay, wire, or check (fee may apply).
Will my payment fluctuate during the term of my finance agreement?
Generally, no. Your payment schedule will remain the same and be part of your finance agreement. However, we offer a wide variety of customized payment options that provide for a fluctuation of payments for qualified customers who choose one of those methods.
Can I make larger payments?
Yes! The additional payment amount is applied to future payments.
Can I pay off early?
Yes! The amount you are responsible for paying is determined by the terms of your agreement.
Do you have prepayment penalties?
No. Stearns Bank’s conditional sales contracts and leases do not assess penalties for early payoff. Under the conditional sales contracts and leases, you agree to pay the entire amount of money identified in the stream of payments that are spread over the term of your agreement.
Why am I being billed for property taxes?
In a lease situation, you are the lessee and Stearns Bank is the owner, so we are billed for the property tax, the cost of which we pass along to you.
Will my business loan show up as a personal debt on my credit report because I am a guarantor?
No. Your business loan is not reported as a personal debt obligation.
Can I combine or add additional equipment to an existing contract?
Yes! We have a variety of options that allow you to combine existing agreements or add additional equipment. Please contact a Stearns Bank account representative to learn more.
Can I sign my documents remotely, without appearing in person to sign?
We offer the most advanced, secure technology for your convenience, and it takes as little as 3-5 minutes to receive, sign, and return your documents electronically. Using your email address or through the Stearns Bank Customer Portal, we can send documents to you electronically via DocuSign® to review, sign, and return with electronic signature.
Do all business owners have to sign a personal guaranty of the business debt?
An owner or officer with authority to contract for your business will sign for the business. As for a personal guaranty, we will review and evaluate the credit history and quality of the business and the personal credit of at least one majority owner(s) of the business. Typically, at least one owner (i.e., the majority owner) will guaranty the business debt.
Can I still apply if I am a sole-proprietorship?
Yes! This is business financing, and sole-proprietorships are eligible for business financing with Stearns Bank.
How can I apply?
Call Stearns Bank today at 1-800-247-1922. We’ll answer on the first ring!
Can I sell the equipment I am financing or transfer payment on my finance agreement to another business?
In selling or ownership transfer, you should call us immediately. According to a Stearns Bank finance agreement, you must get our prior written consent to make these types of changes. We have flexible options available to accommodate sales or transfers of the equipment we are financing. Please contact your account representative to discuss.