Equipment loans and EFAs leave the business owning the machine; leases do not until any buyout. This page works through a mower loan, a hotel lease, an older chipper, classroom tables, a $1 buyout lease and a fair market value lease, all with invented figures.
At a glance
- Pays for
Machines and fixed-price equipment from a seller's quote
- Backed by
The equipment itself
- Forms
Equipment loan, finance agreement or lease
Is equipment financing debt? What a Rogers, AR landscaper still owes halfway through a mower loan
An equipment loan is debt: the business owes a balance, and the mower secures it until the last payment. In 2024 the Nonemployer Statistics put 700 landscaping businesses without paid staff in Benton County (NAICS 56173).
Invented example, the same inputs the calculator on this page takes: a commercial walk-behind mower priced at $16,935, $2,150 down, 48 months at 11.05% annual interest. In this invented case the monthly payment is $382.49, total interest $3,574.52 and the total cost with the down payment $20,509.52.
After 24 of the invented payments, about $8,202.27 is still owed in this invented example. A sale of the mower before then would have to clear that balance first.
How do equipment leases work? Luggage carts and an electric guest shuttle at a Rogers, AR hotel
Under a lease, the equipment belongs to the leasing company, which pays the seller; the hotel rents its use for a fixed number of months. The hotel never owns the carts or the shuttle unless the lease ends with a buyout.
- The hotel picks the equipment and gets a seller's quote.
- The leasing company pays the seller and owns the equipment.
- The hotel makes the monthly lease payments for the term.
- At the end it returns, renews or, if the lease offers it, buys the equipment.
Invented example: carts and a shuttle cart with an invented $12,940 price leased over 36 months at $412.85 a month, $14,862.60 in invented lease payments, after which this invented lease simply ends and the equipment goes back.
Matching the term to the working life of a brush chipper for a Benton County, AR tree and landscape crew
The expected working life of a machine is a sensible ceiling for the term, and a partner may set the term with that in mind. Ask the seller for the expected service life and the seller's quote before sending the request.
Invented example: a brush chipper at $33,750, financed at 11.45% annual interest. Over 42 invented months the chipper costs $979.09 a month, with $7,371.78 of interest in all. Over 60 invented months it drops to $741.40 a month, but interest climbs to $10,734.00 and the last payments may fall after the machine is worn out.
A crew that chips every working day wears out knives and bearings sooner than one that chips twice a month, so the term worth asking for follows how hard the machine will work.
Other machines get priced over a set term in the articles: cardio for a gym, an overseeder and a dump trailer and classroom tablets and climbers, while a separate article sets dealer financing beside a cash discount.
What an equipment finance agreement means for a Benton County, AR child care provider's laundry pair and bottle refrigerator
An equipment finance agreement (EFA) is a single contract: the funding source pays the seller, the child care provider owns the washer, dryer and bottle refrigerator from delivery, and a fixed payment runs until the end of the term. Some EFAs show the payment schedule without a stated rate.
- Add up every payment in the schedule instead of stopping at the monthly figure.
- Check whether the agreement allows an early payoff, and at what amount.
- Note what happens to the equipment if a payment is missed.
Invented example: $10,835 of infant-room laundry and refrigeration equipment over 36 months, priced at 12.55% a year in this invented case, runs $362.73 a month and $13,058.28 over the term. ZIP 72756 addresses held 9 child day care employers in 2023 (ZIP Code Business Patterns, NAICS 624410).
How does a $1 buyout lease work? Plate-loaded machines and air bikes at a Rogers, AR gym
A $1 buyout lease runs for a set term, and at the end the gym pays one dollar and keeps the equipment. The price of using the leasing company's money sits inside the monthly payments.
Invented example: plate-loaded machines, racks and air bikes quoted at $24,360, leased over 36 months at $809.35 a month. In this invented case the gym pays $29,137.60 including the $1 at the end, $4,777.60 over the quoted price.
ZIP 72756 addresses held 3 fitness and recreational sports centers with paid staff in 2023 (ZIP Code Business Patterns, NAICS 713940).
What is a fair market value lease? An espresso machine at a Rogers, AR cafe, and the choice at month 36
A fair market value lease keeps the payment lower because the cafe is not paying off the whole machine. At the end it can return the espresso machine, renew, or buy it at what it is worth then, a figure nobody knows at signing.
Invented example: 36 payments of $317.60, $11,433.60 in invented lease payments before that end-of-term choice.
The machine is equipment; its water line, drain and electrical hookup are property work outside this site.
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