Separate the asset price from the financing price
Start with a written cash price for the equipment. Then list freight, installation, sales tax, training and any required maintenance contract separately. Those are real business costs, but they are not all finance charges. If a lender includes them in the balance, you pay interest on them too. A financing comparison should show both the complete installed asset cost and the additional cost of borrowing.
A dealer can make a payment look smaller by extending the term, collecting a larger deposit or leaving a purchase payment until the end. None of those changes proves that the financing is cheaper. Ask whether the quoted payment buys ownership, only pays for use, or requires a final payment to transfer title. Compare offers on the same equipment, deposit and repayment horizon.
A loan and a lease are different contracts
With a conventional equipment loan, the business borrows to purchase an asset and the lender may take a security interest in it. The balance normally falls as principal is repaid. A lease can instead charge for use and require return, renewal or purchase at the end. Some contracts are economically similar to a loan, but their labels alone do not settle ownership or payoff rights.
Read the purchase option carefully. A fixed dollar buyout is different from a fair market value purchase option whose amount is unknown today. If the final buyout is uncertain, calculate more than one total cost and show the assumption. Do not compare a lease payment that excludes ownership with a loan payment that ends in ownership without accounting for the difference.
What public pricing can actually tell you
U.S. Bank publicly lists a $375 origination fee, terms from 24 to 60 months and no required down payment for the equipment financing product described on its page. Those facts describe one published product, not every lender. The page does not establish an industry interest rate range. We therefore use an expressly hypothetical rate for the calculation below instead of turning an unverified market claim into a fact.
A quoted rate can be fixed or variable. The example uses a fixed rate throughout. If an offer uses an index, identify the index, spread, reset timing and any floor. This site retains its prime assumption of 7.00% as of 16 September 2026; that does not mean equipment loans universally price from prime. Check the actual contract rather than adding a spread to an index it never uses.
Equipment cost items and example ranges
The published fee below is attributed to U.S. Bank. All other numerical amounts are hypothetical inputs or results; they are not advertised lender terms. The range isolates the effect of adding the listed fee.
| Cost item | Amount or range | What it means |
|---|---|---|
| Origination | $375 published reference | U.S. Bank lists this fee for its equipment financing product. Confirm current terms. |
| Interest in the example | 8% assumed fixed rate | Chosen only to demonstrate the calculation. No market rate claim is made. |
| Deposit | $20,000 assumed | Reduces a hypothetical $100,000 purchase to an $80,000 borrowing need. |
| Financing cost | $17,327 to $17,702 | Calculated 60 month interest plus $0 to $375 in fees under the stated assumptions. |
| Lease buyout | Contract specific | A purchase option can add a substantial final payment. No universal amount is verified. |
Worked example: a $100,000 machine
Hypothetical example, not a lender offer: the machine costs $100,000, the business pays a $20,000 deposit and borrows $80,000 for 60 months at a fixed 8%. Assume a $375 origination fee paid separately at closing, equal monthly payments and no balloon.
- Borrowed balance = $100,000 less $20,000 = $80,000. The deposit pays for part of the asset; it is not interest.
- Monthly rate = 8% ÷ 12 = 0.6667%. Payment = $80,000 × (0.08 ÷ 12) ÷ [1 less (1 + 0.08 ÷ 12) raised to the power of negative 60] = about $1,622.11.
- Using the unrounded payment, total scheduled repayments = about $1,622.111543 × 60 = $97,326.69. Interest = $97,326.69 less $80,000 = $17,326.69.
- Total financing cost including the fee = $17,326.69 + $375 = $17,701.69. Total acquisition cash outlay = $20,000 + $97,326.69 + $375 = $117,701.69 before operating costs.
- For a fee inclusive annual cost, treat initial net borrowing benefit as $80,000 less $375 = $79,625. Solve $79,625 = the present value of 60 monthly payments of $1,622.111543. The monthly rate is about 0.6833%, giving a nominal annualized APR of 8.20%.
- The compounded effective annual rate is (1 + 0.00683271) raised to 12, less 1 = about 8.51%. Without the fee, nominal APR is 8% and compounded effective annual cost is about 8.30%.
These results assume payments start 1 month after funding. A deposit paid earlier, irregular seasonal installments, financed fees or a final buyout change the cash flows. Rounding individual payments to cents can also produce a small final payment adjustment. Calculate from the actual dated schedule when available.
The comparison graphic shows financing cost, not the equipment purchase price. Choosing a longer term may reduce each payment while increasing total interest. A useful life shorter than the repayment term creates another risk: you may still owe money on equipment that needs replacement.
What drives the cost up or down
A larger deposit lowers the financed balance and dollar interest, but it also uses cash that may be needed for payroll or installation. Compare the cost of borrowing with the effect on liquidity instead of treating the largest possible deposit as automatically best. Under the same fixed rate, financing fewer dollars reduces interest proportionately.
The asset matters. Useful life, resale market, age and condition affect how easily equipment could be recovered and sold. Specialized machinery with limited buyers is different from a widely traded vehicle. Those factors can affect underwriting and offered terms, but we do not assign unsupported numerical premiums to them.
Payment structure matters as much as rate. A balloon postpones principal repayment. Seasonal payments may better match revenue but change annual cost. Maintenance requirements, insurance and restrictions on moving the equipment can add obligations outside the headline financing figure. Identify each obligation before signing.
Early payoff rights can change the value of a seemingly cheaper contract. If the agreement requires most remaining lease payments even after an early buyout, paying early may not save much. Obtain a written payoff formula and compare it with a conventional declining balance loan rather than assuming every agreement behaves like one.
Frequently asked questions
Is the advertised monthly payment the total equipment cost?
No. It can omit the deposit, closing fee, taxes, maintenance and final purchase payment. Add all required cash flows and identify whether ownership transfers at the end. A payment is useful for a budget, but it is not a complete price comparison.
Is the $375 fee an industry standard?
No. It is a published U.S. Bank product reference checked in October 2026. Other providers can charge different amounts or structure fees differently. We have not verified a universal equipment financing fee or interest rate range.
Can financing installation costs make a loan more expensive?
Yes. If installation is included in principal, it earns interest for the repayment period just like the equipment price. Show those costs separately, then include their financing effect. Do not count the installation invoice itself as an additional finance charge.
Does a lease always have a lower APR?
No. A smaller payment can reflect a return obligation or an excluded buyout. Compare equivalent ownership outcomes and all cash flows. Where the final purchase price is unknown, use clearly labelled scenarios instead of presenting one precise effective rate as settled.
Which calculator should I use?
The SBA calculator is relevant if the equipment purchase uses SBA 7(a) financing. It is not an equipment lease calculator and should not be used to model an unknown buyout. Use the worked formula here for a simple loan and obtain a dated schedule for more complex terms.
Calculators and product details
- SBA 7(a) calculator for eligible equipment financing
- Equipment financing product costs
- Bank term loan costs
Calculator results are educational estimates, not quotes. Check whether the payment timing, fee treatment and repayment structure match your document before comparing a result with a disclosed APR. Our methodology explains the existing models and their limitations.
Related guides
Sources
These primary sources support the rules and product mechanics discussed above. Hypothetical examples are our calculations from explicitly stated assumptions, not published offers. Pricing and program schedules change; verify the current document before relying on any figure.
- U.S. Bank: equipment financing: Published $375 origination fee and 24 to 60 month terms checked in October 2026. No advertised interest rate is assumed.
- SBA: 7(a) terms and conditions: Official rate cap, 10, 20 and 25 year maturities, rate caps and prepayment rules.. Use the current SBA notice for fiscal fees.
- Federal Reserve: H.15 selected interest rates: Primary reference for checking published bank prime. This guide preserves the site assumption rather than asserting independent verification of its date.
- New York DFS: commercial financing disclosure regulation: Official explanation of finance charge, APR and disclosure requirements for different commercial financing structures.