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Unpacking Common Misconceptions about Equipment Finance

Are you in the market for some new equipment but worried about the cost? You may be considering equipment financing as a way to get what you need without breaking the bank. However, there are a lot of misconceptions out there about this type of funding.

Before you make any decisions, it’s important that you understand the truth about equipment finance. Here are common myths that need unpacking.

1. You Have to Put Down a Large Down Payment

With equipment financing, you may be able to put down as little as 0% for a down payment. This means that you can get the equipment you need without having to front a large sum of money.

2. The Application Process is Long and Complicated

On the contrary, the application process for equipment financing is usually pretty straightforward. In most cases, you can apply online in just a few minutes and receive a decision quickly (thank you, internet).

3. You Need Perfect Credit to Qualify

Let's shut this one down right here. You don’t need perfect credit to qualify for equipment financing. In fact, many lenders work with businesses that have less than perfect credit.

4. Equipment Financing is Expensive

Actually, equipment financing can be quite affordable. In many cases, the monthly payments are lower than if you were to lease or rent the equipment.

5. You Have to Make a Long-Term Commitment

False. With equipment financing, you’re not locked into a long-term commitment. You can choose repayment terms that best accommodate your business's needs and fits your budget.

6. You Own the Equipment at the End of the Loan

This one is a tricky myth because it is subjective and depends on the consumer's desires and needs. When choosing between an equipment lease or an equipment loan, if you are someone who wants to own the collateral at the end of the financing term, then a loan is the better choice for you. A lease may be the better option if the equipment you need is destined to become obsolete in the foreseeable future and will inevitably require upgrading.

7. You Have to Make Monthly Payments

With some types of equipment financing, you may have the option to make quarterly or semi-annual payments instead of monthly payments. This can help free up cash flow for other expenses. This is dependent on your lender and their ability to accommodate your unique needs.

8. You Need Collateral to Qualify

It's true, many lenders will indeed require collateral when you apply for a loan. However, some lenders offer unsecured loans with no collateral required. In which cases, the equipment that you finance or lease will serve as the collateral itself.


Equipment financing can be a great way to get the equipment you need without having to pay for it all upfront. However, it’s important that you understand how it works before you make any decisions. Be sure to do your research and work with a reputable lender to get the best deal possible that fulfills your business's immediate needs.


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