Estimate your equipment loan payments and total cost
Typical: 10-20% for equipment
Typical: 6-15% for equipment
Monthly Payment
$0.00
Loan Amount: $0.00
Down Payment
$0.00
Total Interest
$0.00
Total Payments
$0.00
Total Cost
$0.00
Equipment financing is a specialized type of business loan used to purchase equipment, machinery, vehicles, computers, medical devices, or other business assets. The equipment itself serves as collateral for the loan, making it easier to qualify than unsecured financing.
This type of financing is essential for many businesses. Construction companies need heavy machinery, restaurants need commercial kitchen equipment, medical practices need diagnostic tools, and manufacturers need production lines. Equipment financing allows businesses to acquire these necessary assets without depleting cash reserves.
Unlike a general business loan, equipment financing is tied to specific assets. If the borrower defaults, the lender can seize the equipment. This security allows lenders to offer competitive rates—typically 6% to 15%—and longer terms that match the equipment's useful life.
Calculating equipment financing payments uses the standard amortization formula. Here's the process:
Loan Amount = Equipment Cost − Down Payment
Monthly Payment = P × [r(1+r)^n] ÷ [(1+r)^n − 1]
Total Interest = (Monthly Payment × n) − Loan Amount
Total Payments = Monthly Payment × n
Total Cost = Down Payment + Total Payments
$50,000 equipment with 15% down payment at 8% for 5 years:
| Equipment Cost | $50,000.00 |
| Down Payment (15%) | $7,500.00 |
| Loan Amount | $42,500.00 |
| Interest Rate | 8% |
| Term | 5 years (60 months) |
| Monthly Payment | $861.12 |
| Total Interest | $9,167.20 |
| Total Payments | $51,667.20 |
| Total Cost (with down payment) | $59,167.20 |
Equipment financing interest rates vary based on several factors: borrower's credit score (typically 650+ required), business revenue and history, equipment type (new vs used), and the loan term. Rates for 2026 range from approximately 6% to 15%.
Here's how different interest rates affect a $42,500 5-year equipment loan:
Borrowers with excellent credit (720+) and established businesses qualify for the lowest rates. Equipment dealers often offer promotional financing with special rates.
The down payment is the upfront amount you pay toward the equipment purchase. Equipment financing typically requires 10-20% down payment, though some lenders offer 100% financing with no down payment for well-qualified borrowers.
A larger down payment reduces the loan amount, which lowers monthly payments and total interest. It also demonstrates financial commitment to the lender, potentially qualifying you for better rates.
Here's how different down payments affect a $50,000 equipment purchase:
Equipment financing terms typically match the useful life of the equipment. Common terms are 3-10 years depending on equipment type:
Longer terms mean lower monthly payments but more total interest. Choose a term that balances payment affordability with total cost.
Your monthly equipment financing payment is the fixed amount you pay each month to repay the loan. It includes both principal and interest, calculated to fully amortize the loan by the end of the term.
The payment must fit within your business budget. Financial advisors recommend keeping total debt payments below 20% of monthly revenue. For equipment that generates revenue (like a delivery vehicle or production machine), the equipment should pay for itself through increased productivity.
Before committing to equipment financing, calculate your monthly payment and ensure it's sustainable. Consider the equipment's expected return on investment and revenue generation potential.