How Equipment Financing Is Priced

Equipment loans for business — from excavators to MRI machines to bakery ovens — are usually secured by the equipment itself, which keeps rates below unsecured business credit. Lenders quote a rate and term, then compute a fixed payment on the amount financed after your down payment and any trade-in. Some structures add a residual: a balloon equal to a percentage of the original cost that you pay (or refinance) at the end, which lowers the monthly payment because you are only financing the depreciation. That is the same logic as a car lease, and it means two loans with identical rates and terms can have very different payments depending on the residual — always compare the total interest, not just the monthly number.