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2 min read

Equipment Leasing Payments: What Equipment Financing Really Costs


Many equipment leasing companies do everything they can to hide the true costs from you, the equipment buyer, until you've gone through their system and are so deep in the buying process that it's hard to back out. 

There are online equipment finance calculators that only show you the lowest cost (which less than 10 percent of their shoppers qualify for) and online ads that talk about 4% equipment leasing rates. 

The Problem With Phony Equipment Leasing Calculators 

The companies that do this think that if you know what the financing really costs, they won't be able to get you as a customer.

They want to make you a dumb shopper.

Here at Smarter Finance USA we believe that many small businesses don't want to be dumb shoppers, and that at least some business owners want to make a smart business decision based on facts.

If the equipment costs $800 a month and you're going to make $3,000 a month by having the equipment, you can determine on your own if the deal makes sense for your business, without getting scammed.

(That's where the word "Smarter" comes from in our name).

Here's the Truth:

If you have a very low credit score, payments on a piece of equipment might be double what those calculators tell you. 

Yes, double. 

(Not always though... it really depends on the situation...)


Why Are Rates For Equipment Leasing So High?

Well... they're not always high... but if you don't have great credit or your cash flows are minimal... it certainly won't be "cheap money..."

Loaning money to small businesses to purchase used equipment is a pretty risky business.

If you're buying a Honda to drive to work in, that's low risk lending.

You have a job, you can probably make the payments, if you don't make the payments all it takes is a tow truck to get the car, and it can be resold pretty easily.

Compare that to equipment lending: maybe your business has a hiccup and you have a lot less money coming in six months down the road.

Not only that, the equipment is depreciating - fast.

Hopefully you bought your equipment to actually use it...

....and it's not being used to drive the kids to school...

...it might be used to dig holes or to break rocks.

If you don't pay, it's usually not as easy as sending out a towing company to recover the goods - and then the lender must find a buyer.

Not only that, but if your business is down, it's likely that every other business in your industry is down (think 2008) so good luck finding someone to buy that equipment.... 

So, when you're buying equipment, unless you are financing through the dealer (who might be making $30,000 in profit from selling you the equipment - which compensates for the lending risk) the rates equipment leasing companies charge are pretty fair.

In order to be in business, a lending company has to earn enough to both compensate for the default rate (the number of people who can't make their payments) and still make a profit.

Here at Smarter Finance USA we believe that if we give you all the tools you need to make a smart buying decision, you can determine for yourself if you think equipment leasing or financing makes sense.

If we have the opportunity to work with you, we will give you all the information (not just the good stuff) and we hope to keep you as a customer this way. 

To get real information on what your costs might be you can click in the picture below, or give us a call at (866) 631-9996.

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