Financing

Equipment financing in 2026

Most buyers finance rather than pay cash: an equipment loan to own outright, a lease to keep payments low, or rental when utilization is low. In 2026, strong-credit borrowers see roughly 6–12% APR, and the Section 179 deduction tops out at $2.56M with 100% bonus depreciation — which can dramatically cut the after-tax cost of buying.

Section 179 (2026): $2.56M
Bonus depreciation: 100%
Typical APR (strong credit): ~6–12%
Common terms: 24–84 mo

Your four options

Equipment loan

Finance 80–100% of price over 24–84 months; you own the asset and its resale value. Best when utilization is high.

Capital / $1-buyout lease

Lease payments, then own for a nominal $1 buyout. Sits on your balance sheet as an asset — similar economics to a loan.

Operating / FMV lease

Lower payments; the lessor keeps residual risk. Return, renew, or buy at fair market value at term end. Good for refreshing often.

Rental (short-term)

No financing at all — cheapest below ~40% utilization. See rentd for live rates and the break-even calculator.

Rates, terms & down payment

In 2026, well-qualified borrowers typically pay about 6–12% APR (banks/SBA), while alternative lenders run 8–25%+. Terms usually run 24–84 months — shorter terms mean lower rates but higher payments. Down payments range from 0–20% for strong credit up to 20–30% for weaker credit, with the equipment itself as collateral. Equipment-finance volumes hit record highs entering 2026 per ELFA.

Section 179 & bonus depreciation

For 2026, businesses can deduct up to $2,560,000 under Section 179 (phase-out from $4,090,000), and take 100% bonus depreciation on qualifying equipment placed in service after Jan 19, 2025. Together these can let you deduct most or all of a machine's cost in year one — materially changing the buy-vs-lease decision. Confirm current limits with a tax advisor.

Lease vs buy vs rent

The deciding factor is utilization. Above ~60–65% (roughly 150 working days/year), buying or financing-to-own usually wins on total cost. Below ~40%, an operating lease or rental keeps capital free. Run your numbers on the rent-vs-buy calculator.

Financing FAQ

What interest rate should I expect on equipment financing in 2026?

Well-qualified borrowers typically see roughly 6–12% APR from banks and SBA lenders; alternative/online lenders run higher (8–25%+). Rates move with credit tier — an excellent score (750+) lands near the bottom of the range, weaker credit toward the top. Treat these as typical ranges, not quotes.

What is the Section 179 deduction for 2026?

For tax years beginning in 2026, the Section 179 maximum deduction is $2,560,000, with phase-out starting at $4,090,000. Bonus depreciation is 100% for qualifying equipment placed in service after Jan 19, 2025. Confirm current limits with the IRS or a tax advisor before relying on them.

Should I take a $1-buyout lease or an FMV lease?

A $1-buyout (capital) lease works like a loan — you own the machine at the end and it sits on your balance sheet as an asset. An FMV (operating) lease has lower payments because the lessor keeps residual-value risk; at term end you return, renew, or buy at fair market value. Choose $1-buyout to own, FMV to keep payments low and refresh often.

Is it cheaper to lease, buy, or rent?

Buy or finance-to-own when utilization is high (above ~60–65%, roughly 150 working days a year). Use an operating lease to keep payments low and refresh equipment. Rent when utilization is below ~40%. The 40–65% band is where you should run the numbers.

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Informational only, not financial or tax advice. Figures are indicative and change; verify current rates, terms, and tax limits with a qualified advisor.

Sources

Figures are drawn from the sources above and were accurate at the time of writing; market data and rates change — treat ranges as indicative and verify current figures for decisions.