Key takeaways
- The equipment usually serves as collateral.
- Loans mean ownership; leases can mean flexibility.
- Match the loan term to the equipment's useful life.
Best for
Businesses buying tangible assets that hold value.
How it works
The lender funds most or all of the equipment cost, and the equipment typically serves as collateral. You repay over a term often aligned with the equipment's useful life.
Loan vs. lease
With a loan, you own the equipment. With a lease, you rent it and may have the option to buy at the end. Leases can suit fast-changing technology.
Pros and cons
Advantages
- Equipment secures the loan
- Preserves cash
- You own the asset (with a loan)
Things to weigh
- Only for equipment
- Asset may depreciate faster than the loan
- Down payment may be required
Frequently asked questions
Can I finance used equipment?
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Many lenders finance used equipment, though terms may be shorter depending on age and condition.
Should I lease or buy?
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Buying builds ownership and suits long-lasting assets. Leasing can suit technology that becomes outdated quickly.
Do I need a down payment?
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Sometimes. It depends on the lender, the equipment, and your business profile.
This guide is general educational information, not financial, legal, or tax advice. Terms, requirements, and availability vary by lender and your situation.