Equipment Financing Calculator
Calculate equipment loan payments with down payment, residual value, and buy vs lease comparison
Get your rate in minutes
No credit score impact
Borrow up to $500,000+
Equipment Financing Calculator
Finance or Lease? Find Your Best Option
Lease estimate assumes a capital lease factor of ~2.5% of equipment cost per month. Actual lease rates vary by equipment type, credit, and lessor. Tax treatment is simplified — consult a CPA for Section 179 and bonus depreciation specifics.
Key Takeaways
- A $75,000 piece of construction equipment with 10% down ($7,500) and a 10% residual balloon costs approximately $1,234/month at 8.50% APR for 5 years, with $16,540 in total interest.
- The residual value (balloon payment) reduces your monthly payment but leaves a lump sum due at the end of the loan. A 10% residual on a $75,000 purchase means a $7,500 balloon payment in year five.
- The Buy vs Lease comparison shows the total cost of financing versus leasing the same equipment. Buying costs more per month but gives you ownership and Section 179 depreciation; leasing has lower upfront cost but no asset ownership.
- Equipment depreciates at different rates: technology loses 30% per year, construction equipment 15%, and medical equipment 12%. The depreciation chart shows the estimated value of your equipment over the loan term.
- Selecting an equipment type auto-adjusts the depreciation schedule. This matters for resale planning — heavy equipment retains value far better than IT equipment.
How to Use This Calculator
This calculator estimates monthly payments for equipment financing with features specific to business equipment purchases: down payment, residual value (balloon buyout), equipment type-based depreciation, and a buy-versus-lease comparison.
Step 1 — Enter the equipment cost. This is the full purchase price before any down payment. The default of $75,000 represents a mid-range piece of business equipment. The slider goes up to $500,000; type a larger number directly for higher-value equipment.
Step 2 — Set your down payment. Most equipment lenders require 10%–20% down, though some offer zero-down programs for borrowers with strong credit. The down payment reduces your financed amount and total interest.
Step 3 — Select your equipment type. This affects the depreciation schedule shown at the bottom. Technology equipment depreciates fastest (30%/year), while construction and manufacturing equipment holds value longer (14%–15%/year). The type does not affect the payment calculation — only the depreciation forecast.
Step 4 — Set financing terms. Enter the APR (typically 6%–15% for equipment loans), choose a term (2–7 years), and set the residual value percentage. A residual of 10% means your last payment includes a $7,500 balloon on a $75,000 purchase. Set to 0% for a fully amortizing loan with no balloon.
Understanding the Results
The monthly payment accounts for the down payment (reducing the financed amount) and the residual value (reducing the monthly payment by deferring part of the principal to the end). The donut chart breaks down the total cost into four components: down payment (dark green), principal paid through monthly payments (navy), interest (gold), and the balloon payment (gray).
The Buy vs Lease comparison is the decision tool. Equipment loans result in ownership — you have an asset on your balance sheet and can claim Section 179 depreciation (up to $1,220,000 in equipment purchases in 2026). Leasing treats the payment as a fully deductible operating expense but you never own the equipment. The lease estimate uses a 2.5% monthly factor, which is a common ballpark; actual lease rates depend on the lessor, equipment type, and your credit profile.
The depreciation chart shows the estimated residual market value of the equipment over the loan term. This is important for two reasons: it tells you whether the equipment will be worth more or less than your balloon payment at end of term, and it helps plan resale timing. If the depreciation line drops below the loan balance, you are “upside down” — owing more than the equipment is worth.
Equipment Financing Rates by Type
| Equipment Type | Typical APR | Common Terms | Depreciation Rate | Useful Life |
|---|---|---|---|---|
| Vehicles / Trucks | 6%–12% | 3–7 years | ~20%/year | 7 years |
| Construction / Heavy | 7%–14% | 5–7 years | ~15%/year | 10 years |
| Medical / Dental | 6%–10% | 5–7 years | ~12%/year | 10 years |
| Technology / IT | 8%–18% | 2–4 years | ~30%/year | 5 years |
| Manufacturing | 7%–12% | 5–7 years | ~14%/year | 10 years |
Rates are estimates for borrowers with good credit (680+). Depreciation rates are approximate market averages and vary by specific make, model, and condition.
Frequently Asked Questions
What is a residual value or balloon payment?
The residual value is a percentage of the original equipment cost that you defer to the end of the loan as a single lump-sum “balloon” payment. A 10% residual on a $75,000 purchase means your monthly payments are calculated on $67,500 instead of the full amount, but you owe $7,500 at the end of the term. This lowers monthly payments but requires cash or refinancing at maturity.
Should I buy or lease equipment?
Buy if you plan to use the equipment for most of its useful life and want to build equity in an asset. Lease if you need to upgrade frequently, want lower monthly costs, or prefer to keep equipment off your balance sheet. The Buy vs Lease comparison in the calculator shows the total cost difference. Also consider tax implications: buying gives you Section 179 depreciation; leasing gives you a fully deductible operating expense.
What credit score do I need for equipment financing?
Most equipment lenders require a FICO score of 650 or higher. Because the equipment itself serves as collateral, credit requirements are often lower than unsecured business loans. Borrowers with scores of 700+ qualify for the best rates (6%–10%). Scores of 580–649 may still qualify but at higher rates (15%–25%). See our business loan comparison for lenders by credit tier.
How much down payment is required?
Typical equipment financing requires 10%–20% down. Some lenders offer zero-down programs for borrowers with excellent credit or for lower-cost equipment. Higher down payments reduce your monthly payment and total interest. Use the down payment slider above to see how different amounts affect your cost.
Can I finance used equipment?
Yes. Most equipment lenders finance both new and used equipment, though used equipment may have shorter maximum terms and slightly higher rates. The equipment must have a reasonable remaining useful life — most lenders want the loan term to be shorter than the equipment’s expected remaining lifespan. Used equipment is often the better value when depreciation is steepest in the first 1–2 years.
What is the difference between an equipment loan and an equipment lease?
An equipment loan is a purchase financed with debt — you own the equipment from day one (or after the final payment). An equipment lease is a rental agreement — you make payments for the right to use the equipment but do not own it unless you exercise a buyout option at the end. Loans appear as assets and liabilities on your balance sheet; operating leases do not (though capital leases do under ASC 842).
References & Further Reading
- SBA — Loan Programs (Equipment Eligible)
- IRS — Section 179 Deduction
- Equipment Finance Association — Industry Data
Keep Reading
- Best Business Loans — Compare equipment and general business lenders
- SBA Loan Calculator — SBA equipment financing with rate caps
- Business Loan Affordability — How much can your business borrow?
- Business Loan Calculator — General business loan payments
- All PrimeRates Calculators