Business Loan Calculator for Equipment Finance

An equipment finance calculator models monthly payments and after-tax cost across the three main equipment-financing structures — equipment loan, capital (finance) lease, and operating lease — and lets you stack Section 179 expensing and bonus depreciation on top to see true after-tax cost. IRS Publication 946 (How to Depreciate Property), Section 179 of the Internal Revenue Code, and the Equipment Leasing and Finance Association (ELFA) Monthly Confidence Index are the authoritative sources for current equipment-finance benchmarks and tax rules.

US small businesses finance roughly $1 trillion of equipment annually across these three structures, and the right structure depends on tax position, balance-sheet objectives, and how long you intend to hold the asset.

1. Equipment loan - You own the equipment immediately; lender takes a UCC-1 security interest - Depreciate the asset on your books; deduct interest expense separately - Section 179 expensing or bonus depreciation available in year of placed-in-service - Typical rate: 7-12% APR depending on credit and asset type - Term: matched to equipment useful life, typically 3-7 years

2. Capital (finance) lease - Lessor owns title, lessee has economic ownership - Often a $1 buyout or fair-market-value buyout at end of term - For tax: treated like a loan — depreciate, deduct interest portion of lease payment - For GAAP: capitalised on the balance sheet under ASC 842 - Same Section 179 / bonus depreciation eligibility as a loan

3. Operating lease (true lease) - Lessor retains title; lessee returns at end of term - Lower monthly payments because no equity buildup - Tax: deduct the full lease payment as operating expense (no depreciation, no Section 179) - GAAP: on-balance-sheet under ASC 842 (right-of-use asset and lease liability) - Typical with technology, vehicles, and equipment with rapid obsolescence

Section 179 expensing 2026: - Maximum deduction: up to $1.22 million in equipment cost expensed in year of placed-in-service (verify against the current IRS Section 179 cap, which is indexed annually) - Phase-out: begins at $3.05 million in equipment placed in service in the tax year; dollar-for-dollar reduction in the cap above that - Eligible property: tangible personal property used in the active conduct of a trade or business - Election: made annually on Form 4562

Bonus depreciation 2026: 60% of basis in year of placed-in-service for qualifying property (down from 100% pre-2023, phasing 20 percentage points per year toward 0% in 2027 under the current TCJA sunset, subject to ongoing legislative changes — verify current rate). Bonus depreciation applies to the portion of basis not expensed under Section 179.

Worked example — equipment loan with Section 179: A landscaping company buys a $80,000 truck on a 5-year loan at 8% APR. Using M = P × [r(1+r)^n] / [(1+r)^n − 1] with r = 0.08/12 = 0.006667 and n = 60, the monthly payment is $1,622.11. Total paid over 60 months = $97,327. Total interest = $17,327 — about 22% of principal in interest over the term. Under Section 179, the full $80,000 cost is deductible in year 1 if elected; at a 35% combined federal-plus-state marginal rate, that's $28,000 of federal-plus-state tax saved in year 1, bringing the effective after-tax cost of the truck to roughly $69,327 ($97,327 total paid minus $28,000 tax shield, before discounting).

Worked example — operating lease comparison: the same $80,000 truck on a 5-year operating lease at $1,400/month means $84,000 total lease payments over 60 months — slightly less than the $97,327 loan total. The lessee deducts $16,800/year in lease payments (about $5,880/year federal-plus-state tax shield at 35% marginal, $29,400 total over 5 years), making the after-tax cost of the lease roughly $54,600. The lease wins on after-tax cost in this scenario, but the company doesn't own the truck at the end — if the truck still has $25,000-$30,000 of residual value, the loan-plus-Section-179 path leaves you with the asset and the lease path doesn't.

Industry-typical equipment-finance norms: - Construction: heavy equipment financed 3-7 years; manufacturer captives (Caterpillar Financial, John Deere Financial, Komatsu Financial) often beat bank rates - Trucking: tractor financing 3-5 years; trailer financing 5-7 years; PACCAR Financial, Daimler Truck Financial, and Navistar Capital are the captives - Manufacturing: machine-tool financing 5-10 years on long-life capex; CIT, US Bank Equipment Finance, and Wells Fargo Equipment Finance dominate - Medical equipment: 3-7 years; manufacturer programs (Siemens Healthineers Financial, GE HealthCare Capital) compete with specialty lenders - Technology / IT: 2-4 year operating leases dominant due to obsolescence risk

For authoritative current rules, IRS Publication 946 covers MACRS depreciation, Section 179, and bonus depreciation; the IRS Form 4562 instructions cover the election mechanics; and the ELFA Monthly Confidence Index publishes current equipment-finance pricing and volume benchmarks. Pair this calculator with /roi-calculator for the project-level return analysis and /business-loan-calculator/us for conventional loan alternatives.