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Guides 7 min read Updated May 30, 2026

Should You Buy That Machine Cash or Finance It?

You have the cash. The salesman is offering 8% financing. The right answer isn't automatically 'pay cash to save the interest'—for most manufacturers, financing at reasonable rates and keeping cash working in the business beats cash purchase.

The opportunity cost math

A $250k CNC financed at 8.5% over 5 years costs about $57k in interest. That same $250k deployed as working capital funding another $500k–$800k in production revenue at your gross margin (say 30%) generates $150k–$240k a year. Financing the machine and running the cash typically wins by a wide margin—assuming you have somewhere productive to run the cash.

Section 179 and bonus depreciation

You can still take Section 179 or bonus depreciation on financed equipment (EFA or $1-out lease). The tax treatment is identical to a cash purchase in year one—so you get the deduction and keep the cash.

When cash wins

Pay cash if: financing rates are above 12%, you have no productive use for the freed-up cash, or the machine is small enough (under $30k) that the paperwork and fees make financing not worth it.

Frequently Asked Questions

Usually 0–15%. Zero-down is common on new equipment from established vendors.

3–7 business days on standard EFAs under $500k. Larger deals or used private-party purchases take 1–2 weeks.

No. Equipment financing is secured by the machine itself, so it typically does not encumber your bank line or other working-capital facilities.

Yes. Section 179 and bonus depreciation apply to the full purchase price on financed equipment placed in service that year, regardless of your down payment. Confirm the specifics with your CPA.

Most lessors and equipment lenders will roll the payoff into a new agreement when you trade up. Fair-market-value leases are especially flexible on end-of-term swaps.

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