LEASE OR LOAN
Lease it, or borrow to buy it?
Both put the machine on your floor this month and spread the cost over years. They differ in who owns it, what secures it, what you pay to start, and what you are holding when the last payment clears.
THE DIFFERENCE
It comes down to who owns the machine
With a loan you buy the equipment and the lender takes a security interest in it. The asset is yours from day one, it sits on your balance sheet from day one, and you carry it there until you sell it or write it off.
With a lease we buy the equipment and you use it. We pay your vendor directly, you take delivery, and you pay for the use of the machine rather than for the machine. At the end of the term you decide what happens to it — return it, buy it, or keep leasing it.
That single difference is where every other difference comes from: what you put down, what the paperwork asks for, what the payment does to your tax return, and whether obsolete equipment is your problem in five years or ours.
SIDE BY SIDE
The two, next to each other
Written for equipment specifically. A loan against a building behaves differently from a loan against a machine, and this is the machine version.
An equipment loan
- You own the equipment from the first day
- Usually a down payment, sometimes a substantial one
- The asset and the debt both sit on your balance sheet
- You depreciate the equipment over its class life
- Often a fuller financial package to get approved
- Bank lenders may take a blanket lien across other assets
- You carry the resale risk when the equipment is obsolete
An equipment lease with ACG
- We buy it and pay your vendor; you take delivery
- No down payment — two advance payments at signing
- A fixed payment for a fixed term, 18 to 60 months
- The equipment is the collateral, not your whole business
- One page to apply from $10,000 to $150,000
- Seasonal, step-up and 90-day deferred structures available
- Return it, buy it or extend at the end — your choice
Neither column is a verdict. A business that intends to run one machine for fifteen years and has the cash for a down payment is in a different position from one replacing a scanner every four.
WHEN LEASING WINS
Where a lease is the better instrument
The equipment dates faster than it wears out
Imaging, IT, production and anything with a software stack in it. A lease ends on a date you chose, with three options waiting for you. Ownership ends whenever you find a buyer.
The cash is worth more in the business
There is no down payment on a lease with us. Two advance payments are due at signing and that is the whole of what you pay up front, so the working capital stays where it earns.
You want the whole project on one agreement
Freight, rigging, installation, staff training and support can be written into the same lease instead of arriving later as invoices you did not budget for.
Your year is not evenly shaped
Seasonal schedules for businesses that earn in bursts, step-up structures for equipment that takes time to ramp, and a 90-day deferred program that lets the machine run before the first payment is due.
The paperwork matters as much as the money
Most of our transactions are written on the one-page Application Only program, from $10,000 to $150,000, with no financial statements at all.
You would rather not pledge the business
The equipment secures the lease. A bank facility may reach further into your assets and bring covenants with it.
WHEN BORROWING WINS
Where a loan is the better instrument
We would rather tell you this than have you find it out after signing something.
You will keep the equipment for its whole life
A machine you intend to run for fifteen or twenty years, with a long service life and a real second-hand market, is an asset worth owning outright from the start.
You have idle cash and no better use for it
If a down payment costs you nothing you would otherwise have earned, owning early is cheaper than owning late.
The equipment is a small part of a bigger facility
Buying a building, a fit-out and the machines together is usually one financing conversation, not three.
Your accountant wants the asset on the books
Ownership from day one, depreciation on your own schedule, and a residual value you control. Ask them — this is exactly the question they are for.
BOTH, ACTUALLY
We write both sides of this page
The choice is not lease-here-or-borrow-elsewhere. Alongside true leases we write equipment finance agreements — an EFA is the loan-shaped version of the same transaction, where you own the equipment from the start and we hold a security interest in it until the term is done.
So the real conversation is about structure, not about which company you call. Tell a specialist what the equipment is, how long you expect to run it and what you want to be holding at the end, and the structure follows from the answers. The four structures we write are set out on their own page.
The application is the same one page either way, and asking for a quote pulls no credit and commits you to nothing.
TAXES
Confirm the tax half with your accountant
A lease payment is generally an operating expense rather than a capital purchase, and Section 179 applies to financed equipment as well as to equipment bought outright. Which treatment your agreement gets depends on how it is structured and on your own tax position.
We are an equipment finance company, not a tax advisor. The difference between a lease and a loan on your return is worth a twenty-minute call with your accountant before you sign either one.
QUESTIONS
Lease or loan, asked plainly
Is it better to lease or finance equipment?
It depends on how long you will keep the machine. If it dates faster than it wears out, or the cash matters more in the business than on the balance sheet, a lease usually wins. If you will run it for its whole service life and have cash for a down payment, owning it outright from the start usually wins.
What is the difference between an equipment lease and an equipment loan?
Ownership. On a loan you buy the equipment and the lender secures against it. On a lease we buy the equipment, pay your vendor directly, and you pay for the use of it, then choose at the end of the term whether to return it, buy it or extend.
Do you need a down payment to lease equipment?
Not with us. There is no down payment on a lease. Two advance payments are due when you sign the paperwork, and that is the whole of what you pay up front. Equipment loans commonly ask for a down payment.
Is leasing equipment more expensive than buying it?
Over the full life of a machine you keep forever, owning it costs less. Over a machine you replace on a cycle, the comparison changes, because leasing prices the years you actually use rather than the whole asset, and it leaves the down payment in your business earning.
What is an equipment finance agreement?
An EFA is a loan-shaped equipment transaction. You own the equipment from the start and the finance company holds a security interest in it until the term ends. We write EFAs as well as leases, so the choice is one conversation rather than two applications.
Does a lease or a loan show up on my balance sheet?
Equipment bought with a loan sits on the balance sheet as an asset with matching debt. How a lease is treated depends on how it is structured and on the accounting standards you report under. Your accountant is the right person to answer this for your business.
Can I buy the equipment at the end of a lease?
Yes. Buying it is one of the three options at the end of the term, alongside returning it and extending the lease. What the purchase looks like depends on the structure you signed, which is agreed up front and not decided later.
Which is faster to get approved?
The lease, in most cases. Our application is one page, a decision usually comes back the same day, and we contact you within about 24 hours with a structure. A bank equipment loan generally asks for a fuller financial package first.
Three steps to your equipment
01
Fill out an application
Complete our simple, one-page application. No mountain of paperwork.
02
Receive a custom plan
We contact you, typically within 24 hours, with a lease structure tailored to your needs.
03
Get your equipment
We purchase your new or used equipment from any vendor you wish.
Newer business, or no financials to hand? We have programs for both — startup financing and no financials required.
FREE QUOTE
Get a custom quote in minutes
Tell us what equipment you need and roughly what it costs. An ACG specialist follows up, typically within 24 hours, with options built around your business.
Business equipment financing. $10,000 minimum. We do not finance personal or household purchases.
- — NO OBLIGATION, NO HARD CREDIT PULL
- — NEW OR USED, ANY VENDOR
- — OR CALL (949) 271-5800
Keep reading
Types of lease
FMV, purchase option, nominal buyout and EFA, in plain language.
Why lease at all
Twelve reasons businesses lease their equipment instead of buying it.
Estimate a payment
Enter an equipment cost and see roughly where the monthly payment lands.
What moves the payment
The seven things that decide the number on the quote.
New business, or no financials to hand? See startup financing and no financials required.
Decided? It is one page.
31 years financing equipment for small business. Apply, or call and talk it through first.