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. Published 2026 guides put equipment loan rates at roughly 8% to 30% APR over 24 to 72 month terms, with credit tier driving where you land in that band.
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 8% to 30% APR per 2026 equipment financing guides; strong credit lands 6% to 12% | Priced as a payment factor; effective cost typically runs above a same-credit loan |
| Terms | 24 to 72 months per published guides | 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%, mid-band for average credit per the published tiers, 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 typical 10% buyout and the all-in passes $75,000. The lease saved $185 a month in cash flow and cost several thousand more overall, which is exactly the trade it exists to offer.
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 the published 8% to 30% 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?
- Published 2026 guides put the range at roughly 8% to 30% APR across 24 to 72 month terms: strong credit near 6% to 12%, average credit 12% to 20%, challenged credit above that. 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 the upper published band, 20% to 30% APR, 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 structures funding around the need, including equipment purchases 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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