Equipment Financing

by Gerri Detweiler

If you need to purchase business equipment, consider equipment financing. Business equipment is a pretty broad term but these loans cover equipment ranging from an espresso machine for a coffee shop to specialized machinery for manufacturing. Usually the equipment vendors work with lenders for financing with the APR ranging from 8-25% depending on your credit score, your industry and the resale value of the equipment. You can either lease the equipment, buy the equipment with a loan, or do a sale-and-leaseback transaction (sell the equipment to a lender for some cash upfront and lease the equipment back).

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What You Need to Know About Equipment Financing

Pros: Cons:
Relatively low APR Can require high down payment
Predictable monthly payments Requires strong credit for good terms
Helps build business credit Financed equipment can become outdated, but you are stuck with it at the end of your payment term.
Equipment serves as strong collateral


Best Uses for Equipment Financing:

  • Businesses in need of equipment
  • Businesses in need of working capital that have equipment
  • Startups

Nav’s verdict:

Overall, equipment financing is fairly accessible to business owners as the collateral is pretty strong. If you intend to own the equipment for a long time, shop for financing partners. It can be your bank, alternative lenders, lenders who specialize in equipment financing or lenders who work with the vendor. Find the lowest cost option with best terms. You can save a lot of money on this.

Equipment Financing Offers

Advertiser Disclosure

Equipment Lease by TimePayment

TimePayment is an award-winning equipment leasing company that specializes in transactions with a selling price Learn More

Equipment Financing by LendSpark

LendSpark’s creative, ethical financing solutions fuel growth for businesses of all sizes and stages. Learn More
View More Offers
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About Author

Gerri Detweiler

Gerri Detweiler

Credit expert Gerri Detweiler is education director for Nav. She has more than three decades of experience in consumer credit education, has been interviewed in more than 3500 news stories, and answered over 10,000 credit questions online. Her articles have been widely syndicated on sites such as MSN, Forbes, and MarketWatch. She is the author or coauthor of five books, including Finance Your Own Business: Get on the Financing Fast Track. She has testified before Congress on consumer credit legislation.