There's a reason equipment financing approves faster and more often than almost any other business loan: the collateral is standing right there. Lift, truck, diagnostic machine, trailer - if the payment stops, the lender knows exactly what secures the deal. That security translates into approvals for businesses that would struggle to get an unsecured dollar anywhere else.
Here's how equipment financing actually works in 2026, what it costs, and how to structure it so the equipment pays for itself.
How equipment financing works
You pick the equipment - new or used, from a dealer or a private seller. The lender pays for it (typically 80-100% of the purchase price), and you repay over a fixed term of 2-7 years. The equipment itself is the primary collateral, which is why rates run lower and approvals run higher than unsecured products.
At the end of a loan you own the asset outright. Lease structures ($1 buyout, 10% purchase option, FMV) shift the ownership timing and the tax treatment - more on that below.
What rates look like right now
Used equipment, high-mileage vehicles, and highly specialized machinery price a bit higher because resale value is less predictable. Titled vehicles (trucks, trailers) often get the best structures of all - the title itself simplifies the lender's collateral position.
| Borrower profile | Typical APR | Typical terms |
|---|---|---|
| Strong (680+, 2+ yrs in business) | 7% - 12% | 3-7 years, up to 100% financed |
| Average (620-680, 1-2 yrs) | 12% - 20% | 2-5 years, 85-100% financed |
| Challenged (sub-620 or under 1 yr) | 18% - 30%+ | 2-4 years, down payment likely |
The Section 179 advantage
Section 179 lets most businesses deduct the full purchase price of qualifying equipment in the year it's placed in service - even when it's financed. Finance a $120,000 truck in November, deduct $120,000 from this year's taxable income, and you've potentially saved $25,000-$40,000 in taxes while having paid only a couple of monthly installments so far.
This is the quiet math that makes financing beat waiting-and-saving for most profitable businesses: the tax shield often exceeds the first year of interest several times over. (Confirm your specific eligibility and limits with your CPA.)
Finance the equipment, keep the cash
The question isn't 'can I afford to buy it outright?' It's 'what else could that cash do?' If $80K of equipment generates $3K/month of new revenue and the payment is $1,700, the equipment funds itself - and your cash is still available for the opportunity you haven't met yet.
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What do you need funding for?
Qualifying: what lenders actually look at
- Time in business - 6+ months opens most doors; 2+ years opens all of them
- Credit - the guarantor's score sets the rate tier, but the equipment's value can outweigh a mediocre score
- Revenue - enough monthly cash flow to cover the payment comfortably (lenders like to see the payment under ~10% of monthly revenue)
- The equipment itself - age, hours/mileage, brand resale strength, and whether it's income-producing
The Dealerun difference on equipment deals
Because we specialize in vehicles and equipment-heavy industries, our lending partners understand assets that generalist lenders lowball - from diagnostic machines to reefer trailers. Up to $5M per deal, approvals in hours, and funding fast enough to catch an auction closing this week.
Price out your equipment deal
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FAQ
Can I finance used equipment or a private-party purchase?+
Yes. Many of our partners fund used equipment and private-party sales, including auction purchases. Expect slightly shorter terms on older assets, and the lender will verify the asset's value and title/lien status.
What credit score do I need for equipment financing?+
Programs exist from roughly 550 up. Around 620 the options widen considerably, and 680+ unlocks bank-grade pricing. Because the asset secures the loan, equipment financing is the most credit-forgiving major loan product.
How fast can equipment financing close?+
Simple deals (titled vehicles, standard machinery, clean credit) regularly close in 24-48 hours. Complex or large deals ($500K+) take a few days to a couple of weeks for inspections and documentation.
Loan or lease - which is better?+
If you'll keep the asset past the term, a loan or $1-buyout lease usually wins. If the equipment ages out fast (tech, some medical), an FMV lease with upgrade flexibility can make sense. The right answer is a math problem - run both against your tax situation.
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