How to use the equipment loan calculator
Enter the equipment price, your down payment, and the rate and term from your offer. If your lender offers a balloon payment, enter it as a percentage of the cost to see how much it lowers the monthly payment, and how much you will owe at the end. The table shows interest, principal, and the remaining balance for each year.
Worked example
An $80,000 machine with 10% down leaves $72,000 to finance. At an example rate of 12% over 60 months, the payment is about $1,602 a month. Add a 20% balloon ($16,000 due at the end) and the payment drops to about $1,406, but you need a plan to pay or refinance the balloon.
Balloon payments: lower payments now, a lump sum later
A balloon structure keeps part of the balance unpaid until the final month. It helps when equipment earns revenue slowly at first, or when you plan to trade it in. The risk is having to find the lump sum, or refinance it, at the end of the term. Compare the total cost with and without a balloon before you choose.
Equipment loan, lease, or something else?
- Equipment financing: you own the equipment, and it usually secures the loan, so qualifying can be easier than with an unsecured loan.
- Leasing: lower upfront cost and easier upgrades, but you may not own the equipment at the end. See equipment leasing vs. financing.
- SBA loans: longer terms for larger purchases, with more paperwork. Try the SBA loan calculator.
Taxes: Section 179
Businesses can often deduct the cost of qualifying equipment in the year it is placed in service under Section 179, even when the equipment is financed. For tax years beginning in 2025, the IRS lists a maximum deduction of $2,500,000, reduced once total qualifying purchases pass $4,000,000. Limits change, so confirm the current rules with IRS Publication 946 and your tax professional.
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Frequently asked questions
How is an equipment loan payment calculated?
The amount financed (price minus down payment) is spread over the term at your interest rate using standard amortization. If there is a balloon, that amount is held back and paid at the end, which lowers each monthly payment.
What is a balloon payment on an equipment loan?
A balloon is a lump sum due with the final payment. It lowers your monthly payment, but you must pay it off or refinance it when the term ends.
How much down payment do I need for equipment financing?
It depends on the lender, your credit, and the equipment. Many lenders ask for 0% to 20%, with more for older, used, or specialized equipment.
How long can I finance equipment?
Terms usually follow the equipment's useful life, often 2 to 7 years. SBA 504 loans can finance long-life machinery for 10 years or more.
Can I deduct financed equipment under Section 179?
Often yes. Section 179 lets many businesses deduct qualifying equipment in the year it is placed in service, even if it is financed. Check IRS Publication 946 and a tax professional for current limits.
Sources
- Publication 946, How to Depreciate Property, Internal Revenue Service
- 504 loans, U.S. Small Business Administration
Disclaimer: This calculator is for educational and comparison purposes only and does not constitute a loan offer, financial advice, tax advice, or a guarantee of terms. Example values are illustrations, not quotes. SmallByzLoans is a funding marketplace, not a lender or financial advisor.