Equipment Loan vs. Equipment Lease
The right structure depends on how long you plan to use the machine, whether you want ownership at end of term, and your tax posture.
The quick answer
If you'll keep the machine for its useful life and want depreciation, use an EFA or $1-out lease. If you want lowest monthly payment and plan to upgrade in 3–5 years, use an FMV lease.
Side by side
| Equipment Loan (EFA) | Equipment Lease | |
|---|---|---|
| Ownership | You own on day one | Lessor owns; you use |
| End of term | You keep it | $1 buyout, FMV, or return |
| Monthly payment | Higher | Lower (FMV) / similar ($1-out) |
| Tax treatment | You depreciate + deduct interest | FMV: full payment deductible |
| Down payment | 0%–15% | 0%–first & last |
| Term | 24–84 months | 24–72 months |
When Equipment Loan (EFA) is the right call
- You want to own the equipment outright
- You'll use it for 7+ years
- You want to depreciate the asset (Section 179 / bonus)
- You're buying used equipment from a private seller
When Equipment Lease is the right call
- You want the lowest monthly payment
- You expect to upgrade in 3–5 years
- You prefer full payment as an operating expense
- The equipment obsoletes quickly (tech, robotics)
Bottom line
For most CNC, press, and packaging equipment, we recommend an EFA—simpler, cleaner ownership, and Section 179 friendly. FMV leases fit when you genuinely plan to upgrade.
Frequently Asked Questions
Other comparisons
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