Equipment financing pays for a specific machine, vehicle or system, and the asset itself secures the deal. That collateral is why pricing sits near the cheaper end of the small business market, but the spread between the best and worst offers is very wide.
Typical terms of three to seven years, usually matched to the useful life of the asset.
Educational estimates only. This page is general information, not financial advice. Cost of Financing does not offer, broker or arrange loans, and we accept no lender sponsorships, referral fees or lead payments.
How equipment financing is priced
Most offers are quoted as a monthly payment rather than a rate, which makes comparison hard. Behind the payment sit three numbers: the amount financed, the term in months and the money factor or interest rate the lender applies. Multiply the payment by the number of months, subtract the amount financed and you have the total finance charge before fees.
On top of that sit documentation fees, UCC filing fees and sometimes an advance payment of one or two months collected at signing. An advance payment quietly raises the effective APR because you are financing slightly less money than the paperwork suggests while paying the same schedule.
Some agreements are leases rather than loans. A dollar buyout lease usually behaves like a loan. A fair market value lease has a balloon at the end, so the headline payment looks cheaper than the true cost of ownership.
Typical 2026 cost range
For 2026 we see an approximate effective APR range of 7 to 30 percent. Bank and captive manufacturer programs for established borrowers cluster at the bottom of that band. Independent equipment finance companies serving younger or thinner credit files sit in the middle. Fast approval online lenders on used or specialty assets reach the top.
Read every quote as a range rather than a fixed price. Two lenders looking at the same business and the same machine can land ten percentage points apart on the same week.
What moves you within the range
Time in business and personal credit score do most of the work. Beyond that, the asset matters as much as the borrower. Standard, liquid equipment with a deep resale market prices better than custom or software heavy systems that a lender cannot easily sell.
New assets price better than used. Shorter terms price better than long ones. A cash down payment of ten to twenty percent often moves an offer several points, because the lender is instantly below the resale value of the machine.
When equipment financing makes sense
It fits when the asset produces revenue over years and you want the payment schedule to match that useful life rather than draining working capital in one hit. It also fits when the alternative is a short term product priced far higher.
It fits poorly when the equipment will be obsolete long before the term ends, or when the total finance charge is larger than the productivity gain you expect from the machine.
Before you sign
Ask for the amount financed, the term and the total of payments, then work the rate backwards
Check whether the deal is a loan, a dollar buyout lease or a fair market value lease
Count advance payments and documentation fees as part of the cost, not as extras
Educational estimates only. This page is general information, not financial advice. Cost of Financing does not offer, broker or arrange loans, and we accept no lender sponsorships, referral fees or lead payments.