Equipment Loan Calculator
An equipment loan calculator is a tool that helps business owners estimate the costs associated with equipment loans. Equipment loans are used to purchase business equipment such as machinery, vehicles, computers, and other assets. These loans are typically secured by the equipment being purchased, which often results in lower interest rates.
Equipment Loan: Paying Back a Fixed Amount Periodically
Use this calculator for basic calculations of equipment loans, or click the links for more detail on each.
Equipment Loan with Balloon Payment: Paying Back a Lump Sum Due at Loan Maturity
Equipment Loan with Down Payment: Predetermined Amount Due at Loan Maturity
Use this calculator to compute the initial value of an equipment loan based on a predetermined face value to be paid back at loan maturity.
Equipment Loan: Fixed Amount Paid Periodically
Equipment loans are installment loans used to purchase business equipment. These loans are typically secured by the equipment being purchased, which reduces the lender's risk and often results in lower interest rates compared to unsecured loans.
Equipment Loan with Balloon Payment: Single Lump Sum Due at Loan Maturity
Some equipment loans include a balloon payment at the end of the loan term. This means the borrower makes regular payments during the loan term but must pay a large lump sum at the end to fully pay off the loan.
Equipment Loan with Down Payment: Predetermined Lump Sum Paid at Loan Maturity
Many equipment buyers make a down payment when purchasing equipment. The loan amount is then based on the purchase price minus the down payment. This calculator helps determine the loan amount needed based on the total purchase price.
Equipment Loan Basics for Borrowers
Interest Rate
Equipment loan interest rates are typically lower than unsecured business loans because they are secured by the equipment being purchased. Rates depend on factors such as the borrower's credit score, business financials, and equipment type.
Loan Term
Equipment loan terms typically range from 3 to 10 years, often matching or slightly exceeding the useful life of the equipment being purchased. Longer terms result in lower monthly payments but higher total interest costs.
Equipment Requirements
Lenders typically have requirements regarding the type, age, and condition of equipment they will finance. New equipment generally qualifies for better loan terms than used equipment.
Advantages of Equipment Loans
- Lower Interest Rates: Secured by equipment, rates are typically lower than unsecured loans
- Tax Benefits: Equipment loan interest and depreciation may be tax deductible
- Equipment Ownership: Borrower owns the equipment outright once the loan is paid off
- Predictable Payments: Fixed-rate loans have consistent monthly payments
- Preserve Capital: Allows purchase of equipment without depleting cash reserves
Equipment loans can be an effective way for businesses to acquire necessary equipment without paying the full purchase price upfront. These loans allow businesses to preserve cash flow while building equity in valuable assets.