When comparing equipment financing offers, it’s tempting to focus on one number:
“What’s my monthly payment?”
But that number doesn’t tell you the whole story.
Two financing offers can have similar monthly payments while having significantly different total costs.
Before comparing offers, look at:
1. Total amount you’ll pay
Add up the payments and all applicable fees—not just the monthly payment.
2. Finance structure
An Equipment Finance Agreement (EFA), $1 buyout lease, and Fair Market Value (FMV) lease can have very different end-of-term and early-payoff provisions.
3. Early payoff provisions
If you expect to pay the equipment off early, understand exactly how the payoff is calculated. Don’t assume an early payoff automatically means a large discount.
4. Interim rent or per diem
Some finance companies charge additional amounts before your first regular payment. Understand exactly when and how these charges apply.
5. Fees
Processing, documentation, origination, and other fees can materially change the total cost of a transaction.
The Bottom Line
Don’t choose equipment financing based solely on the lowest monthly payment.
Look at the complete financing structure and total cost before signing.
A slightly higher monthly payment could potentially represent a better overall deal if the financing has fewer fees, better early-payoff provisions, or a structure that better fits your business.