Try the math
What equipment financing costs.
The equipment backs the request, which is usually why the rate is lower than unsecured money. Put in the amount financed, a rate and the term.
The rate is a starting point, not a quote. If somebody has quoted you one, put it in and see what it costs.
The arithmetic
- Amount financed
- $60,000
- Illustrative rate
- 9% a year
- Repaid over
- 5 years
- Monthly payment
- $1,246
- Total repaid
- $74,730
- Interest paid
- $14,730
Illustration, not a quote. A down payment, a documentation fee or a balloon at the end changes the picture; ask about all three.
See my optionsBefore you sign
Match the term to how long the machine earns, not to the lowest monthly payment.
How equipment financing works, in fullA worked example
The starting position, written out.
Say the machine is a $75,000 truck with a lift, you put $15,000 down and finance $60,000 at an illustrative 9% a year over five years.
Financing added $14,730 to the price of the truck, about a quarter on top. Over seven years the payment falls to $965 a month and the interest rises to $21,089. The question the term answers is not "what can I afford a month" but "will this machine still be earning in year six", because that is the year you are still paying for it.
Illustration, not a quote
- Amount financed
- $60,000
- Illustrative rate
- 9% a year
- Repaid over
- 5 years
- Monthly payment
- $1,246
- Total repaid
- $74,730
- Interest paid
- $14,730
Nobody has offered you these terms. The figures are the calculator's own arithmetic at its starting position; real terms come from a funding partner.
How to read the result
What the numbers are telling you.
The down payment goes in before the slider
The calculator works on the amount financed. Take the price, subtract what you are putting down, and put the difference in. A larger down payment lowers every number on the card, and a lender will usually ask what you are putting in, because the machine is the security and the down payment is your share of it.
What financing adds to the price
Read the interest line as a surcharge on the machine. $14,730 on a $60,000 balance is the machine costing about a quarter more than the sticker. Then ask what the machine earns a month. If it clears its payment in a week of billing, the surcharge is the price of having it now rather than in two years.
A balloon makes the payment look smaller than the loan
Some agreements leave a lump sum at the end. The monthly figure drops, the total does not, and the lump is due the month the machine is oldest. If a quote has a balloon, add it to the total repaid before you compare it with a quote that does not.
Questions
About the arithmetic.
The questions about equipment financing itself, and what a funding partner may look at, are on its page.
Equipment financing, in fullHow do I put a down payment into the calculator?
Subtract it from the price first and put the rest in as the amount financed. On a $75,000 machine with $15,000 down, the amount financed is $60,000. If a quote also rolls a documentation fee into the loan, add that to the amount financed, because you will pay interest on it too.
What does financing add to the price of the machine?
The interest line. On the example it is $14,730 over five years on $60,000, so the machine costs $74,730 rather than $60,000: about a quarter more. Illustration, not a quote. A shorter term or a bigger down payment brings that surcharge down; a longer term or a balloon pushes it up.
Should the term match the life of the machine?
It should not outlast it. A five-year term on a truck that works for ten is ordinary. A seven-year term on a machine that is obsolete in four means three years of payments on something that no longer earns. Ask the person who sells the machine how long it earns for, then set the term inside that.
What is a balloon payment?
A lump sum due at the end of the term, in exchange for a smaller monthly payment along the way. It is not a discount: the same money is repaid, later and in one piece. If you would need to refinance the balloon when it falls due, price that in now rather than then.
Is equipment financing cheaper than an advance for the same purchase?
Usually, and the reason is the machine itself: it holds its value and secures the request, so the money is priced as secured money. The example costs $14,730 over five years on $60,000. The same $60,000 as a merchant cash advance at a factor of 1.30 costs $18,000 however fast you remit it. Illustrations, not quotes; ask for the equipment shape first, and use an advance for what a lender will not secure, like the stock that fills the truck. The equipment page has the rest.
The other shapes
Not the one you meant?
- Try the math
Merchant cash advance
Factor rate times advance: the total you remit, and what the money costs.
- Try the math
Business line of credit
Interest on what you draw, over the months it takes to clear.
- Try the math
Term loan
A fixed monthly payment, and the total interest over the term.
- Try the math
SBA loan
The payment on a long, government-backed term, and the interest over it.
- Try the math
Invoice factoring
Cash now on an unpaid invoice, the fee, and what comes back when it is paid.
Know what you can carry?
Then tell me what you need. About two minutes, no credit pull to start, and the decision stays yours.