Average Equipment Financing Interest Rate in Canada (2025)

Current Average Rates in Canada (2025)

Equipment Loan Interest Rates

• For small and medium-sized Canadian businesses, equipment loan rates typically range between 7% and 14% APR depending on credit quality and lender (Mehmi Financial Group, Mehmi Financial Group).
  
  
• Breaking it down further based on creditworthiness:
  
  
  
  • Strong credit (680+): 8%–11%
    
    
  • Mid-range credit (620–679): 11%–16%
    
    
  • Lower credit or newer businesses: 16%–24%
    
    
  • Alternative or higher-risk lenders: 25%+ (Mehmi Financial Group).
    
    

Equipment Lease Rates

• A “good” lease rate generally falls between 5% and 9%, depending on credit, equipment type, and lender risk (SPAR Leasing).
  
  
• Typical leasing ranges in Canada span 6% to 16%, varying by borrower and asset (SPAR Leasing).
  
  

For businesses with satisfactory credit, lease rates often fall between 7% and 9%, while less competitive lenders or less favorable credit may face rates up to 13% (DBM Accounting).

Factors That Drive Rates

• Credit Score & Business History: Lower risk profiles attract better rates.
  
  
• Equipment Type & Age: New and resale-friendly assets pull better terms.
  
  
• Loan Term & Structure: Longer terms may raise APR; down payments and residuals help lower it.
  
  
• Lender Type: Banks or government-backed lenders often offer lower rates than alternatives.
  
  
• Economic Conditions: Rates track with Bank of Canada and prime rate fluctuations (Mehmi Financial Group, Mehmi Financial Group, Mehmi Financial Group, SPAR Leasing).
  
  

Tips to Secure a Better Rate

1. Boost Your Credit Profile — Show strong financials, pay debts on time, and reduce credit utilization
   
   
2. Provide Strong Documentation — Clear business statements and projections matter (Mehmi Financial Group)
   
   
3. Compare Providers — Explore options from banks, government programs, and brokers like Mehmi
   
   
4. Structure Strategically — Consider down payments, fixed vs. variable rates, or lease terms appropriately (Mehmi Financial Group)
   
   
5. Use Tools Wisely — Try Mehmi’s Equipment Financing Calculator to model scenarios.
   
   

FAQ: Equipment Financing Interest Rates

Q1: What is the average interest rate on equipment financing in Canada?

• Loans: Typically 7%–14% APR (Mehmi Financial Group).
  
  
• Leases: Generally range from 5%–16%; most fall between 7%–13% depending on credit and asset type (SPAR Leasing, DBM Accounting).
  
  

Q2: How does credit score impact my rate?

• Example tiers include:
  
  
  
  • Prime credit (680+): 8%–11%
    
    
  • Mid-range (620–679): 11%–16%
    
    
  • Lower credit/newer business: 16%–24% (Wikipedia, Mehmi Financial Group).
    
    

Q3: Are lease rates always cheaper than loan rates?

• Not always. Lease rates can be competitive and sometimes even lower than loan rates, depending on structure and credit (CEF).
  
  

Q4: Can startups get equipment loans?

• Yes—though expect higher rates unless you can offer collateral, down payments, or strong revenue.
  
  

Q5: Do government programs provide better rates?

• Programs like CSBFP can offer competitive rates through participating lenders; it's worth exploring.
  
  

Q6: What should I do next?

• Run your scenario using the calculator then reach out via Contact Us for personalized insights.
  
  

Final Thoughts

As of 2025 in Canada, equipment loan rates average between 7%–14%, while lease rates typically land between 5%–16%, with most falling in the 7%–13% range. Your actual cost depends on your credit, equipment, and financing strategy. With smart structuring, informed comparison, and tools like the calculator, you can optimize your financing costs and grow confidently.