Equipment Financing Calculator
Calculate your monthly payments and see potential tax savings from Section 179 deduction
How Equipment Financing Works
Equipment financing is a loan secured by the equipment itself. Because the lender can repossess the equipment if you default, these loans typically offer:
Lower Rates
6-15% APR vs. 15-30% for unsecured business loans
100% Financing
Many lenders offer 0% down payment options
Tax Benefits
Deduct full cost in year 1 with Section 179
Section 179 Tax Deduction Explained
2026 Limits
- Maximum Deduction: $1,160,000
- Maximum Equipment Purchases: $2,890,000
- Vehicles: $28,900 deduction for SUVs/trucks over 6,000 lbs
What Equipment Qualifies?
✓ Qualifies
- Machinery & equipment
- Computers & servers
- Office furniture
- Business vehicles (with limits)
- Software
- HVAC systems
✗ Doesn't Qualify
- Real estate
- Buildings
- Land improvements
- Inventory for resale
- Leased equipment (usually)
How Equipment Financing Works
Equipment financing allows businesses to purchase machinery, vehicles, technology, and other assets while spreading the cost over time. Unlike a traditional business loan, the equipment itself typically serves as collateral, which often means lower interest rates and easier qualification.
Monthly payments depend on three main factors: the total equipment cost (minus any down payment), the interest rate or money factor, and the repayment term. Shorter terms mean higher monthly payments but less total interest paid. Most equipment loans range from 2 to 7 years, with terms ideally matching the useful life of the equipment.
Lease vs. Buy: Making the Right Choice
Buying makes sense when you plan to use equipment for many years, want to build equity, or need to take advantage of Section 179 tax deductions. Leasing is better when technology changes quickly, you want lower monthly payments, or you prefer to preserve working capital for other needs.
Use this calculator to compare both scenarios. Enter your equipment cost, expected down payment, and financing terms to see your estimated monthly payment and total cost of ownership. Then explore our equipment financing requirements guide to understand what lenders look for in applicants.
Frequently Asked Questions
What's the difference between equipment financing and leasing?
Financing: You own the equipment, can take Section 179 deduction, build equity. Leasing: Lower payments, easier to upgrade, but you don't own the equipment and may not get full tax benefits.
How much down payment do I need?
Typically 10-20%, but many lenders offer 0% down for well-qualified borrowers. Higher down payments usually get you lower interest rates.
Can I finance used equipment?
Yes, but rates may be slightly higher and lenders may limit financing to equipment less than 5-7 years old. Used equipment also qualifies for Section 179 if it's new to your business.
What credit score do I need?
680+ for best rates. 600-679 can qualify but with higher rates. Below 600, you may need a larger down payment or may only qualify for lease-to-own arrangements.