Equipment financing is a business term loan that enables companies to purchase equipment needed to operate their businesses — such as computers, vehicles or large machinery. An equipment loan is a type of asset-based financing, meaning the equipment acts as collateral to secure the loan.
Rates and terms
Equipment loans typically come with a fixed term — generally around five years, though specific lenders may vary. You’ll need to make regular payments on an equipment loan, usually in monthly installments of the loan principal plus interest, which can be as high as 28% in some cases. Some lenders require a down payment, which can help reduce the overall amount you owe and possibly even the loan’s lifetime.