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Equipment Loan Calculator - Finance Business Equipment

Calculate monthly payments and total financing costs for commercial equipment purchases. Get instant estimates for construction equipment, medical devices, manufacturing machinery, restaurant equipment, and more. Free equipment financing calculator with no registration required.

100% Free CalculatorAccurate Payment EstimatesSection 179 Eligible

Equipment Financing Details

$5K$1M
3%25%
1 year7 years

Your Equipment Financing Estimate

Estimated Monthly Payment

$0.00

Amount Financed

$0.00

Total Cost

$15,000.00

Total Interest Paid

$0.00

Cost Breakdown

Equipment Cost$75,000.00
Down Payment$15,000.00
Total Interest$0.00

Section 179 Tax Deduction Available

Section 179 of the IRS tax code allows eligible businesses to deduct up to $1,220,000 of equipment costs in 2024, which can significantly reduce taxable income. Tax professionals can provide guidance on eligibility and tax implications for specific situations.

Important Disclaimer

This calculator and all content on this page are provided for educational and informational purposes only. The information presented does not constitute financial, legal, or professional advice, recommendations, or suggestions about what actions any individual or business should take.

All content describes how equipment financing works, what factors exist in the lending market, and what scenarios are commonly observed. Calculator results are estimates based on the inputs provided and do not represent actual loan offers, guaranteed rates, or specific terms from any lender.

Before making any financial decisions, individuals and businesses are encouraged to consult with qualified financial advisors, tax professionals, and legal counsel who can provide guidance based on specific circumstances. Equipment financing terms, interest rates, qualification requirements, and tax implications vary significantly based on individual factors and circumstances.

Types of Equipment You Can Finance

Equipment financing exists for various types of commercial equipment, machinery, vehicles, and technology. Below are common equipment categories with typical interest rate ranges observed in the market.

Construction Equipment

Excavators, bulldozers, cranes, backhoes, loaders, and heavy machinery

Typical Rate: 6.5% - 9.5%

Medical Equipment

MRI machines, X-ray systems, dental chairs, surgical equipment, diagnostic tools

Typical Rate: 6.0% - 10.0%

Restaurant Equipment

Commercial ovens, refrigeration units, food prep stations, POS systems

Typical Rate: 7.0% - 12.0%

Manufacturing Equipment

CNC machines, industrial robots, assembly lines, production equipment

Typical Rate: 6.0% - 9.0%

Transportation Equipment

Commercial trucks, delivery vehicles, fleet vehicles, trailers

Typical Rate: 5.5% - 10.5%

Industrial Equipment

Forklifts, generators, compressors, welding equipment, power tools

Typical Rate: 7.0% - 11.0%

What Is Equipment Financing and How Does It Work?

Equipment financing (also known as equipment loans, machinery financing, or gear financing) is a type of secured business loan used for purchasing commercial equipment, machinery, vehicles, or technology. The equipment itself serves as collateral for the loan, which is a factor that affects lending terms and interest rates.

In equipment financing transactions, the lender provides funding to purchase the equipment, and the borrower repays the loan over time through fixed monthly payments that include both principal and interest. Once the loan is fully repaid, ownership of the equipment transfers to the borrower with no further obligations. This differs from an equipment lease, where payments provide the right to use equipment without ownership transfer unless a purchase option is exercised at lease end.

Equipment financing is commonly used in business operations. The structure allows costs to be distributed over time, creates predictable monthly payment obligations, may involve tax code provisions such as Section 179, and is reported to business credit bureaus. The equipment serves as collateral, which is a factor in how lenders assess risk and set approval criteria compared to unsecured business loans.

How Equipment Loans Work: The Financing Process

  1. 1
    Equipment Identification: Businesses identify specific equipment, machinery, or vehicles needed and obtain quotes from vendors or manufacturers.
  2. 2
    Financing Application: Applications are submitted to banks, credit unions, online lenders, or manufacturer financing programs. Applications typically require business financial statements, tax returns, credit history, and equipment specifications.
  3. 3
    Underwriting and Approval: Lenders evaluate creditworthiness, business financial health, equipment value, and ability to repay. Approval timelines range from 24 hours to 2 weeks depending on the lender.
  4. 4
    Receive Funding: Once approved, the lender either pays the equipment vendor directly or deposits funds into your business account. A down payment is typically required (usually 10-30% of equipment cost).
  5. 5
    Make Monthly Payments: Repay the loan through fixed monthly installments over the agreed term (typically 1-7 years). Payments include both principal and interest.
  6. 6
    Own the Equipment: After the final payment, you own the equipment free and clear. There's no balloon payment or purchase option required.

Common Features of Equipment Financing

Equipment loans have various characteristics that differ from other types of business financing. Understanding how these features work can help in evaluating different financing options.

Working Capital Structure

Equipment financing structures allow costs to be distributed across monthly payments over the loan term

Section 179 Tax Code

The IRS Section 179 provision exists for equipment purchases, with deductions up to $1,220,000 in 2024 for eligible businesses. Tax professionals can explain how this applies to specific situations

Credit Reporting

Equipment loan payments are typically reported to business credit bureaus as part of standard lending practices

Collateral-Based Structure

Equipment loans use the purchased equipment as collateral, which is a factor in how lenders assess risk and set interest rates

Term Length Options

Equipment loan terms commonly range from 12 to 84 months, often aligned with equipment depreciation schedules

Secured vs Unsecured Rates

Secured loans (with collateral) typically have different interest rate structures compared to unsecured business loans

Equipment Loan vs Equipment Lease: Understanding the Differences

Equipment Loan

Secured financing where ownership transfers after final payment

Characteristics:

  • Ownership of equipment transfers to borrower after loan repayment
  • Section 179 tax deductions may be available (consult tax professional)
  • Equipment use and modifications determined by owner
  • Common terms are 5+ years
  • Monthly payments typically higher than lease payments
  • Down payments typically range from 10-30%
  • Equipment obsolescence considerations rest with owner

Common Usage Patterns:

Equipment loans are commonly used for long-term equipment needs (5+ years), scenarios involving ownership priorities, and equipment with extended useful life spans.

Equipment Lease

Rental agreement for equipment use over a fixed period

Characteristics:

  • Monthly payments typically lower than loan payments
  • Lease payments may be tax deductible as business expense (consult tax professional)
  • Equipment upgrades available at lease end
  • Down payments often lower or not required
  • Ownership remains with lessor unless purchase option exercised
  • Total payments over equipment lifetime typically higher
  • Usage restrictions and terms defined in lease agreement

Common Usage Patterns:

Equipment leases are commonly used for short-term needs (1-3 years), technology with rapid obsolescence cycles, and scenarios where equipment flexibility is a factor.

Frequently Asked Questions About Equipment Financing

Get answers to common questions about equipment loans, financing requirements, rates, and terms.

What is an equipment loan and how does it work?
An equipment loan (also called equipment financing) is a type of secured business loan used for purchasing commercial equipment, machinery, vehicles, or technology. The equipment itself serves as collateral for the loan, which is a factor in interest rate determination. The lender provides funding to purchase the equipment, and the borrower repays the loan over time with interest. After final payment, ownership of the equipment transfers to the borrower.
What types of equipment can be financed?
Commercial equipment that can be financed includes: construction machinery (excavators, bulldozers), medical equipment (MRI machines, X-ray systems), restaurant equipment (commercial ovens, refrigerators), manufacturing equipment (CNC machines, industrial robots), transportation vehicles (commercial trucks, delivery vans), technology (computers, servers), agricultural equipment (tractors, harvesters), and office equipment (copiers, phone systems). Lenders typically finance new or used equipment with remaining useful life.
What are typical equipment loan interest rates in 2024?
Equipment loan interest rates in 2024 typically range from 5.5% to 15% APR. Rates vary based on factors including credit score, business time in operation, equipment type and value, loan amount, down payment size, and lender type (banks, credit unions, online lenders, or manufacturer financing). Borrowers with credit scores of 680+ and established business history may see rates under 7%, while newer businesses or lower credit scores may see rates of 10-15%.
How much down payment is required for equipment financing?
Down payment requirements vary by lender and typically range from 10% to 30% of the equipment cost. Some lenders offer 100% financing for certain borrower profiles or equipment types. Larger down payments (20-30%) are associated with lower interest rates, lower monthly payments, reduced total interest costs, and different approval criteria. The equipment serves as collateral regardless of down payment amount.
What are the qualification requirements for equipment loans?
Equipment loan qualification requirements typically include: minimum credit score of 600-680 (varies by lender), business operating history of 6-24 months or more, annual revenue thresholds of $100,000-$250,000+, cash flow sufficient for payments, down payment of 10-30%, and detailed equipment specifications. Lenders review personal and business credit history, financial statements, tax returns, bank statements, and business plans. Personal guarantees may be required in certain circumstances.
What are the differences between equipment loans and equipment leases?
Equipment loans and leases have distinct characteristics. LOANS typically feature: ownership transfer after final payment, potential Section 179 tax deduction eligibility, longer terms (often 5+ years), and equity building in business assets. LEASES typically feature: retained lessor ownership (unless purchase option is exercised), lower monthly payments, potentially tax-deductible lease payments as business expenses, shorter terms (often 1-3 years), and equipment upgrade options. The choice depends on individual business circumstances, financial situation, and equipment needs. Tax professionals can explain tax implications for specific situations.
What are Section 179 tax benefits for equipment purchases?
Section 179 of the IRS tax code is a provision that allows businesses to deduct the full purchase price of qualifying equipment financed or purchased during the tax year. For 2024, the deduction limit is $1,220,000 in equipment costs, with a phase-out threshold of $3,050,000. This represents an immediate expense deduction rather than depreciation over years. Qualified equipment includes machinery, vehicles, computers, office furniture, and other tangible business property. Tax professionals can explain eligibility and application for specific situations.
How long does equipment loan approval take?
Equipment loan approval timelines vary by lender type: Online lenders typically process approvals in 24-72 hours with funding in 1-5 business days; Traditional banks typically take 1-2 weeks for approval and 2-4 weeks for funding; Credit unions typically process approvals in 3-7 days with funding in 1-2 weeks; Manufacturer financing typically takes 2-5 days for approval. Having documentation ready (financial statements, tax returns, business plan, equipment quotes) can affect processing time. Pre-qualification processes are often available within hours.
Can equipment financing be obtained with bad credit?
Equipment financing exists for borrowers with bad credit (scores 500-600), though terms are typically different than for higher credit scores. Options that exist include: alternative online lenders specializing in lower credit scores (rates 12-25%), larger down payment requirements (30-50%), equipment financing companies that emphasize collateral value, shorter loan terms (24-36 months), co-signers or personal guarantees, and vendor financing programs. Lenders may consider factors such as revenue, cash flow, and business operating history. Payment history on equipment loans is reported to credit bureaus.
What happens in the event of default on an equipment loan?
Default on an equipment loan results in various consequences: the lender has the right to repossess the equipment (as it serves as collateral), credit scores decline significantly (both personal and business), deficiency judgments may occur if equipment sale proceeds don't cover the remaining loan balance, legal action and collection efforts may follow, and future financing terms are affected. Personal assets may be involved if a personal guarantee was signed. In cases of financial difficulty, borrowers have the option to contact their lender to discuss possible modifications, deferments, or restructuring arrangements.

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About This Equipment Loan Calculator

This free calculator provides estimates for monthly payments and total financing costs based on the inputs provided. Results are available for various equipment types including construction equipment, medical devices, manufacturing machinery, restaurant equipment, and more.

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