The short answer
Finance the equipment when you want to own it at the end; lease it when you want lower payments and planned replacement. NerdWallet puts equipment financing at roughly 4% to 45% APR, with terms usually tied to the equipment's useful life, often two to seven years, and credit and lender type driving where you land.
How Do an Equipment Loan and a Lease Compare?
The structures split on ownership, and everything else follows from it.
| Equipment loan | Equipment lease | |
|---|---|---|
| Ownership | Yours at payoff | Lessor's; buyout optional at term end |
| Published rates | Roughly 4% to 45% APR per NerdWallet; bank and SBA lenders roughly 4% to 15% for well-qualified borrowers | Priced as a monthly payment; convert each quote to an implied rate before comparing |
| Terms | Often two to seven years, tied to useful life, per NerdWallet | Commonly 24 to 60 months |
| Payments | Higher; principal plus interest | Lower; you pay for use, not ownership |
| Tax treatment | Section 179 expensing on qualifying purchases, with the 2026 limit at $2,560,000 per IRS published figures | Lease payments generally deduct as operating expense |
| Best fit | Long-lived assets: ovens, trucks, machines | Fast-obsoleting gear: tech, medical devices |
What Does the Same Machine Cost Each Way?
Run the arithmetic on a $60,000 kitchen line. A 60 month loan at 12%, an illustrative rate for average credit, costs about $1,335 a month, roughly $80,100 total, and you own a machine with years of life left.
A 60 month lease on the same equipment at a lower $1,150 payment totals $69,000 with nothing owned at the end; add a 10% buyout and the all-in reaches $75,000. That lease saves $185 a month and, in this illustration, about $5,000 overall, but only because its implied rate works out near 8.5%, below the 12% loan. Lease pricing varies widely, so convert every quote into an implied rate before assuming which structure costs more.
Section 179 changes the loan math further: expensing the full $60,000 in year one against profits, within the published 2026 limit, can return a five-figure tax benefit the lease structure spreads out instead.
When Is Leasing Genuinely the Right Choice?
Leasing earns its premium in real cases. Equipment that will be obsolete before it wears out, imaging tech, computers, some POS hardware, belongs on a lease that ends when its usefulness does. Businesses preserving cash for growth may rationally pay the lease premium to keep working capital deployed. And operating leases keep some balance sheets cleaner for other borrowing.
The trap is not the lease; it is the noncancelable capital lease dressed as one, the same structure our free-terminal teardown documents in payments. Read whether it is a true lease or a disguised purchase before signing anything.
How Do You Decide for Your Purchase?
Five checks settle most equipment decisions.
- Useful life beyond the term: finance it; obsolete by term end: lease it
- Run total cost both ways at your real credit tier against NerdWallet's published 4% to 45% band
- Price the Section 179 benefit with your accountant before comparing payments
- Read lease buyout and end-of-term clauses; $1 buyouts are loans wearing lease costumes
- Match term to asset life; financing gear past its useful life is paying for a corpse
Commonly Asked Questions
What are equipment financing rates right now?
NerdWallet puts the range at roughly 4% to 45% APR: about 4% to 15% at bank and SBA lenders for well-qualified borrowers and about 6% to 45% at online and specialized equipment lenders, with terms often two to seven years. The equipment itself serving as collateral keeps rates below unsecured products.
Can I get equipment financing with weak credit?
Often yes, because the equipment secures the loan. Expect pricing toward the upper end of the published band, larger down payments, and shorter terms. Six months of clean payments builds toward refinancing at a better tier.
Is the Section 179 deduction real money?
Yes, for profitable businesses: qualifying equipment placed in service can be expensed up front, with the published 2026 limit at $2,560,000. The deduction favors purchases and financed purchases over most lease structures; confirm treatment with your accountant.
Does Batch Capital finance equipment?
Batch Capital places equipment purchases with funders on its panel through term loans and working capital products, and matches the structure to the asset rather than forcing one product onto every purchase.
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