Equipment Loan Calculator: How Much Can You Afford?
Whether you work in an office with dozens of custom computers or as a landscaper with a fleet of zero-turn mowers, your business needs certain tools, vehicles and other gear to keep it running smoothly.
Outfitting your business with specialty equipment can be expensive, though. What’s more, the cost to finance those purchases is often hard to estimate without an equipment loan calculator.
This easy-to-use equipment financing calculator can help you understand the terms and costs to finance those purchases.
Estimate Your Costs with the Equipment Financing Calculator
The equipment loan calculator is an estimation tool that provides a range of possibilities depending on the loan amount, interest rate and term selected.
We encourage you to experiment with our equipment calculator. Input different interest rates and repayment periods to see how your payment is affected. Terms can be adjusted on the equipment finance calculator to increase or decrease your payment, for example.
Here are the steps to follow when you’re ready to estimate your payment:
Step 1: Enter the total value of the equipment you plan to finance.
Step 2: Enter the estimated interest rate into the equipment finance calculator. These rates typically fall within the 8% to 24% range depending on your unique business qualifications and down payment.
Step 3: Select the length of financing in months. Your term will depend on your business’s eligibility. Typically equipment loan terms range from 12-72 months.
Step 4: Calculate. The equipment financing calculator will output the monthly payment.
Keep in mind, you may be charged a one-time loan origination fee, which is an upfront cost when the loan is funded. These are not factored into the equipment loan calculator results.
Note: This equipment loan calculator is built to estimate the terms of equipment loans for purchases. It does not function as an equipment lease calculator and cannot provide equipment lease payment estimates.
Components of the Equipment Finance Loan Calculator
The equipment loan calculator has the following inputs:
Loan Amount
For equipment loans, whether you receive a loan offer for the full value of the equipment you intend to buy depends on the lender you’re working with, your unique business qualifications and the total value of the equipment being financed. This is not to mention any portion of the price you decide to pay upfront.
Interest Rate
There’s always a cost to access funds to improve your business. With equipment loans, lenders express these costs through interest rates.
An interest rate is the most common term used to describe the cost of borrowing money. Essentially, this is the amount charged by a lender against the principal loan, and it’s expressed as a percentage, not including associated fees. This is the rate you would input into the business equipment loan calculator to estimate your payments.
Keep in mind, an interest rate is different from an APR, which includes the interest rate as well as additional costs and fees over a 12-month period.
Loan Term
At its core, a loan’s terms comprise how long you have to pay back the loan, the payment frequency and the expectations to which the borrower and lender are held.
When determining the loan term, lenders consider what the business needs and what they qualify for within their lending structure. Unless you pre-pay, the term and the number of monthly payments are fixed. Payments are typically made monthly, but can vary depending on the lender you choose and your business’s unique qualifications.
The term also explains each party’s rights and responsibilities as well as what would occur should something go wrong during the relationship.
An Example of How to Use the Equipment Loan Payment Calculator
Say your construction company is expanding and you need to invest in more heavy equipment. While you were able to find a good deal on a bulldozer for $60,000, you don’t have the room in your budget to support this large of a purchase.
By working with an equipment financing company, your construction company was approved for a portion of the total cost of the equipment. Using our machinery and heavy equipment loan calculator, let’s see just how much your company will pay in total.
Your construction company receives a 75% loan for a $60,000 bulldozer. This means your loan amount will be $45,000 (this is the figure you’ll enter into the construction equipment loan calculator).
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Total Cost of Bulldozer:
$60,000
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Loan Amount:
$45,000
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Amount Not Covered by Loan:
$15,000
The lender charges a 13% interest rate with a 24-month loan term against the $45,000 financed.
Using our heavy equipment financing calculator, we get a monthly payment of $2,139.
Over 24 months, that would equate to a total of $51,336. If we were to subtract the original loan amount from this figure, we’d be able to see that we’d be responsible for $6,336 in interest over the life of the loan.
The Final Calculation on Equipment Loan Repayment Calculators
Determining the total cost of an equipment loan isn’t always straightforward. By plugging your loan amount, estimated interest rate and term into our equipment loan calculator, you’ll have more clarity around what you can expect to pay.
Fast Capital 360 has all the facts you need to know about equipment loans. If you have any questions about your equipment loan offer or your equipment finance calculator results, our team of expert business advisors is here to help.
