Equipment Financing Calculator

Calculate your monthly payment, total interest, and effective cost for equipment loans and leases — including Section 179 tax impact.

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How Equipment Financing Works

Equipment financing lets you acquire equipment — vehicles, machinery, technology, restaurant equipment — by spreading the cost over monthly payments rather than paying cash upfront. The two main structures are loans (you own the equipment from day one) and leases (you use the equipment and may buy it at lease end).

The calculator above handles both. Here’s what to know about each:

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Equipment Loans

With an equipment loan, the lender pays for the equipment; you repay principal plus interest over the loan term. The equipment itself serves as collateral, which enables lower rates than unsecured financing.

Key variables:

• Loan amount: Equipment cost minus your down payment. Most equipment lenders allow 0–20% down; some require 10–20% for higher-risk equipment types.
• Term: Typically 24–84 months. Longer terms reduce monthly payments but increase total interest paid.
• Rate: Bank loans: 8–15% APR. Online lenders: 15–35%+ APR. SBA 504: ~5.5–7% fixed.

Ownership: You own the equipment throughout the loan term. It appears on your balance sheet as an asset.

Tax treatment: Loan interest is deductible as a business expense. The full equipment cost may be deductible in year one under Section 179 (see below).

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Equipment Leases

With a lease, you pay for the right to use equipment during the lease term. At lease end, you return the equipment, renew the lease, or purchase at the residual value.

Lease types:

• Operating lease: Lower monthly payments; you return the equipment at lease end. Residual value stays with the lessor. The equipment does not appear on your balance sheet (in most cases under GAAP).
• Finance lease / capital lease: Structured more like a loan; you own (or effectively own) the equipment by term end. Appears on balance sheet.
• $1 buyout lease: You pay a nominal $1 at term end to own the equipment outright. Treated as a loan for tax and accounting purposes.

The money factor: Lease financing costs are expressed as a “money factor” rather than an APR. Multiply the money factor by 2,400 to approximate the equivalent APR. A 0.002 money factor equals approximately 4.8% APR.

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Section 179 Tax Deduction — 2026

Section 179 of the IRS tax code allows businesses to deduct the full cost of qualifying equipment in the year it’s purchased and placed in service — rather than depreciating over the equipment’s useful life.

2026 Section 179 limits:

• Deduction limit: $1,160,000 (verify current limit at irs.gov — this adjusts annually for inflation)
• Phase-out begins at: $2,890,000 in equipment placed in service
• Applies to: New and used equipment, vehicles (subject to specific vehicle limits), software

How it affects your financing decision:

If you’re in the 25% tax bracket and buy $100,000 in qualifying equipment, the Section 179 deduction saves you $25,000 in taxes. That effectively reduces your net equipment cost to $75,000 — regardless of how you financed it.

The calculator’s Section 179 box shows this impact on your net cost. It is an estimate — the actual savings depends on your specific tax situation, whether your business is profitable, and whether the equipment qualifies. Consult a tax adviser before making purchase decisions primarily for Section 179 purposes.

Important: Section 179 is not available if your business shows a net loss. The deduction cannot create or increase a loss — any unused deduction carries forward to a future profitable year.

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Monthly Payment Reference Table

Common equipment financing scenarios. Use the calculator for your specific numbers.

Equipment Cost	Rate	Term	Monthly Payment	Total Interest
$50,000	10%	60 months	$1,062	$13,741
$50,000	20%	60 months	$1,323	$29,377
$100,000	10%	60 months	$2,125	$27,481
$100,000	15%	60 months	$2,379	$42,745
$100,000	20%	60 months	$2,649	$58,928
$250,000	10%	84 months	$4,089	$93,451
$250,000	12%	84 months	$4,378	$117,749
$500,000	8%	84 months	$7,804	$155,556

Assumes no down payment. Interest costs are approximations.

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Loan vs. Lease — When Each Makes Sense

Choose a loan (own the equipment) when:

• The equipment has a long useful life (10+ years)
• You want to build equity in the equipment
• You plan to use it beyond the financing term
• Section 179 deduction is valuable and the equipment qualifies
• The equipment holds resale value (vehicles, machinery)

Choose a lease when:

• The equipment becomes obsolete quickly (technology, medical equipment)
• You want lower monthly payments and don’t need to own
• The equipment is used for a project with a defined end date
• Your balance sheet treatment of off-balance-sheet leases matters
• The lease rate (money factor) is competitive vs. loan APR

There is no universally better option. The calculator’s comparison view shows you the total cost difference for your specific scenario.

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Where to Find Equipment Financing

Once you know your target monthly payment and total cost, compare lenders:

• Banks and credit unions: Lowest rates (8–15% APR) for businesses with 680+ credit and 2+ years in business. Approval takes days to weeks.
• SBA 504 loans: Fixed-rate equipment financing at ~5.5–7% for large purchases ($150,000+). Best rates available; approval takes 45–90 days. See SBA Loans guide.
• Online equipment lenders: Faster approval (24–48 hours), accessible with 600+ credit, but higher rates (15–35%+ APR).
• Manufacturer financing: Some equipment manufacturers offer promotional rates (sometimes 0%) through their finance arms. Check before applying elsewhere.

See Best Equipment Financing Companies for a ranked comparison.

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Frequently Asked Questions

What credit score do I need for equipment financing? Bank lenders typically require 680+ personal credit. Online equipment lenders (National Funding, Crestmont Capital, Balboa Capital) work with 600+ in most cases. SBA 504 loans require 680+. Equipment serves as collateral, which is why credit requirements are lower than unsecured financing — the lender can recover the equipment if you default.

Can I get equipment financing as a startup? Some lenders work with businesses as young as 6–12 months, particularly when the equipment serves as strong collateral. Most bank lenders require 2+ years. SBA microloans (up to $50,000) are accessible to startups. If you’re brand new, a personal loan or equipment lease with a strong personal guarantee may be more accessible than a business equipment loan.

What is the difference between equipment financing and equipment leasing? Equipment financing (loan) means you own the equipment from day one and build equity. Equipment leasing means you pay for the right to use the equipment — you don’t own it unless you exercise a buyout at lease end. Loans generally carry slightly higher monthly payments but result in ownership. Leases have lower payments but you give the equipment back (or pay residual) at lease end.

Does the calculator account for sales tax on the equipment? No. Enter the total equipment cost including any sales tax if you want accurate payment calculations. Sales tax on equipment purchases varies by state and equipment type — some states exempt manufacturing equipment; others tax all equipment purchases. Consult your tax adviser for your specific state.

Is equipment financing a good idea if I can pay cash? It depends on your opportunity cost and tax situation. If your business generates higher returns on capital than the financing rate (e.g., you earn 25% on deployed capital and finance at 10%), financing is mathematically better — you preserve cash for higher-return uses. If the financing rate exceeds your return on capital, paying cash is cheaper overall. Section 179 can make financing even more attractive in high-tax-rate situations.

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