Equipment Financing 101: How It Works
Equipment financing lets your business acquire the trucks and machines it needs and pay for them over time, while the equipment itself secures the financing. Here's how the pieces fit together so you can apply with confidence.
What is equipment financing?
It's financing, a fixed-term agreement or a lease, used to buy business equipment: tow trucks, excavators, dump trucks, trailers, and more. Because the equipment serves as collateral, approvals are often faster and more flexible than unsecured financing.
You keep your working capital and credit lines free for payroll, fuel, and growth, while predictable monthly payments line up with the revenue the equipment helps you earn.
What determines your rate and terms
Lenders weigh your time in business, personal and business credit, the amount financed, and the type and age of the equipment. Stronger profiles see lower rates and longer terms; newer businesses or challenged credit typically mean a larger down payment or a shorter term.
Terms commonly run 24 to 72 months. Newer, in-demand equipment supports longer terms because it holds its value; older or high-mileage units may be financed over a shorter period.
How much down?
Strong credit with time in business can mean $0 down; challenged credit and newer businesses typically put 20–40% down, depending on the profile and the equipment. A bigger down payment lowers your monthly cost and can offset thinner credit or a short time in business.
New vs. used equipment
Both are financeable. Used and higher-mileage units are common in trucking and construction; the lender will weigh the equipment's age, hours/mileage, and resale value when setting terms.
Financing covered in this article
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