How to Compare Two Equipment Financing Offers Side by Side
October 27, 2026 · 7 min read · Equipment Funding Network
Two equipment financing offers almost never line up neatly. One has a lower payment, the other a shorter term; one asks for more down, the other rolls in a fee; one is a loan, the other a lease. Comparing them on the monthly payment alone is the most common mistake borrowers make. Put them on the same footing first, then decide what matters most to the business.
Step one: make the amount financed the same
If one offer asks for more down than the other, the two are not financing the same amount, and the one with the bigger down payment will look cheaper than it is. Work out the amount financed on each: price, plus taxes and anything rolled in, minus the down payment. If they differ, ask each lender to quote the same down payment, or at least keep the difference in mind as cash you are putting in up front.
Step two: line up the numbers
- Amount financed.
- Monthly payment and number of payments.
- Total of payments: the payment times the number of payments, plus anything due at signing.
- Finance charge: the total of payments minus the amount financed.
- APR, worked out with a spreadsheet's RATE function if the offer does not state it.
- Fees: documentation, origination, filing, and whether they are paid up front or rolled in.
- What is due at signing.
- For a lease, the cost of owning the equipment at the end.
A worked example
Say two offers finance the same $82,000. Offer A is $3,000 a month for 36 months: a total of $108,000, a finance charge of $26,000, and an APR of roughly 19 percent. Offer B is $2,000 a month for 60 months: a total of $120,000, a finance charge of $38,000, and an APR of roughly 16 percent.
Offer B has the lower APR and a payment $1,000 a month lower. Offer A costs $12,000 less in total and is paid off two years sooner. Neither is simply better. If cash flow is tight, or the equipment will earn for many years, B may be the right choice. If the business can carry the higher payment comfortably, A is cheaper in dollars. And if you expect to pay the deal off early, what matters most is how each one treats early payoff.
Put both offers into a spreadsheet with =RATE(number of payments, -payment, amount financed)*12, next to the total of payments and the monthly payment. The three numbers side by side tell you more than any one of them alone.
Step three: read the terms that are not numbers
- Prepayment. Some deals let you pay off early and save the remaining interest; others require all remaining payments, or charge a penalty. If you might pay early, this can outweigh a difference in rate.
- End of a lease. A one-dollar buyout, a fixed-percentage purchase option, and a fair market value option are very different deals. Know which one you are signing.
- What secures the deal. A lien on the equipment alone is different from a lien on all business assets, which can make it harder to borrow elsewhere.
- Personal guarantees. Who has to sign, and for how much.
- Insurance requirements. What coverage the lender requires and what it costs you.
- Conditions to fund. What must happen before the money goes out, such as verifications, inspections or titles.
- How long the approval is good for. An offer that expires in a week is worth less if your seller needs two.
- Late fees and how they are calculated.
Step four: decide what matters most
After the numbers and terms are side by side, the choice usually comes down to one or two things: the lowest total cost, the lowest payment, the shortest commitment, or the most flexibility. A business that is growing fast may value a lower payment and the freedom to pay off early. A business with steady cash may simply want the lowest total. There is no universally right answer; there is the answer that fits the business.
Mistakes to avoid
- Comparing payments without comparing terms.
- Ignoring fees and payments due at signing.
- Treating a lease and a loan as the same thing without checking the end-of-term cost.
- Taking the first offer because the next one would take longer, without asking how much longer.
- Comparing a stated rate on one offer with a factor or a payment on the other, without converting them to the same APR.
Talk to your accountant
A loan and a lease can be treated differently for taxes and on the balance sheet, and that difference can matter as much as the rate. Ask your CPA how each offer would be treated for your business before you sign.
Where EFN fits
EFN is not a lender, and it does not approve or fund deals. You describe the equipment and the business in one short application, and the first step is a soft credit pull that does not affect your score. Whatever terms a lender sends are yours to compare with any other offer you have, and nothing is accepted for you. A person reviews every file before it goes to a lender, and it goes to one lender at a time, not out to a list. If nothing fits, we tell you so. EFN's service is free to you.
Common follow-up questions
What is the best way to compare equipment financing offers?
Make the amount financed the same, then compare the APR, the total of payments and the monthly payment side by side, along with fees, prepayment terms and end-of-term options.
Is the offer with the lowest payment the cheapest?
Not necessarily. A lower payment over a longer term can cost more in total, even with a lower APR.
How do I compare a lease with a loan?
Add the cost of owning the equipment at the end of the lease to its total of payments, then compare with the loan. Ask your CPA about the tax treatment of each.
Does a prepayment penalty matter?
If you might pay the deal off early, yes. Some deals require all remaining payments regardless, which can outweigh a lower rate.
What if one offer does not state an APR?
Work it out with a spreadsheet: =RATE(number of payments, -payment, amount financed)*12, after subtracting any up-front fees from the amount financed.