Quick answer: Equipment financing rates depend on the borrower, asset, term, security and provider; there is no single rate that applies to every business. Compare the total amount paid, fees, required contribution and final payment as well as the quoted rate.
There isn’t a single “average” interest rate for equipment financing in Canada. Your pricing depends on credit strength, asset type and age, term, residual/buyout (if leasing), and whether you roll soft costs into the deal. That said, current Canadian references in 2025 commonly place “good” files in the ~7%–9% zone (sometimes a bit lower for prime assets and stronger credits), with higher pricing for riskier files or specialty equipment. (Soluco, SPAR Leasing, BDC.ca)
For context, government-backed CSBFP term loans cap lender pricing at prime + 3% (or at the lender’s posted residential mortgage rate + 3% for fixed), which helps anchor expectations for bank-style term loans. (ISED Canada)
What lenders are quoting now (quick view)
| Borrower / Deal Profile | Typical Canadian Range (2025) | Notes |
|---|---|---|
| Strong credit, newer/liquid equipment | ~7%–9% | Often cited as a “good” rate for solid files; sharper on prime assets. |
| Average credit and/or older assets | ~9%–13% | Structure, term length, and residuals influence the effective APR. |
| Weaker credit, specialty/niche assets | 13%+ (deal-specific) | Collateral strength and cash flow become decisive. |
Sources indicating “good” files near 7%–9% and examples around 8% are common in 2024–2025 Canadian guides and lender articles. (Soluco, SPAR Leasing, BDC.ca)
Why two “rates” aren’t comparable without structure
Leases are frequently priced with a lease rate factor or money factor, not APR. The factor is a shortcut to quote the monthly payment, while APR reflects the true cost of funds over time.
The same monthly can map to different APRs if residuals, fees, or taxes differ. Always compare apples-to-apples (term, residual/buyout, fees).
If you want ownership from day one, review Equipment Loans. If you prefer lower monthlies with options at term-end, see Equipment Leases and Conditional Sales Contracts.
BDC’s equipment-financing guide emphasizes the complete financing structure when comparing offers.
“Don’t focus only on interest rates”
For the equipment decision discussed here, compare the amount financed, payment schedule, collateral and remaining obligations alongside the quoted rate.
What actually moves your rate (and payment)
| Factor | How it affects pricing | What to consider |
|---|---|---|
| Credit & financials | Stronger files → lower APR | Clean statements, positive trends, adequate liquidity. |
| Asset type & age | Newer, liquid assets price best | Class-8 tractors, mainstream excavators, CNC, material handling often price sharper. |
| Term length | Longer term → lower monthly, not always lower total cost | Match term to useful life and warranty horizon. |
| Residual / buyout (leases) | Higher residual lowers monthly today | Plan how you’ll handle the buyout (cash or finance). |
| Soft costs rolled in | Higher amount financed can nudge cost | Bundling delivery, install, taxes smooths cash but raises payments. |
A Canadian benchmark you can use
BDC’s 2025 example shows a $90,000 equipment loan over 60 months at ~8% producing about $1,825/month—a useful yardstick when comparing lease vs loan cash flow. (BDC.ca)
Model your own scenarios in minutes with Mehmi’s calculator—test 48 vs 60 months, FMV vs fixed residual, and see how rolling taxes or install affects the monthly.
How to lower your effective APR (without surprises later)
- Choose newer, liquid equipment to benefit from stronger resale support.
- Right-size residuals: an FMV or % residual can trim payments; plan now for the buyout via an equipment loan or refinancing & sale-leaseback.
- Keep terms aligned to productive life; avoid stretching beyond warranty.
- Consider a modest upfront or security to improve pricing.
- For frequent purchases, an Equipment Line of Credit can reduce repeat underwriting and carry competitive pricing.
- If bank appetite is limited, explore Asset-Based Lending or pair gear financing with Working Capital or a Business Line of Credit for operations.
Confirm the asset fits our Eligible Equipment or select directly from Mehmi’s inventory—we own the equipment we sell.
Case study: Balancing rate, residual, and term
A Toronto contractor priced a $120,000 excavator.
- Bank loan: 60 months near the bank benchmark; higher monthly, ownership from day one.
- Fixed-residual lease: 60 months with 10% residual; monthly ~8% lower than the loan.
Decision: They took the lease to preserve cash through the build season, and pre-arranged to finance the $12,000 buyout at term-end via an equipment loan to keep the machine in fleet.
Authoritative references
- Innovation, Science and Economic Development Canada — Canada Small Business Financing Program:
The Canada Small Business Financing Program makes it easier for small businesses to get loans from financial institutions by sharing the risk with lenders.
Program eligibility, lender criteria, tax treatment, and product terms can change. Verify current official guidance and the final financing documents before making a decision.
FAQ: Average rates on equipment financing
What’s a “good” rate in Canada right now?
For solid files, many Canadian references cite ~7%–9%; riskier or niche deals price higher. Always compare full structure (term, residual, fees). (Soluco, SPAR Leasing)
Why is my lease “rate” not an APR?
Leases often use a lease rate factor (monthly shortcut). Ask for an APR-equivalent and ensure term, residual, and fees match before comparing.
Do government-backed loans cap rates?
Under CSBFP, term loans are typically capped at prime + 3% (or posted residential mortgage rate + 3% for fixed). (ISED Canada)
Are used equipment rates higher?
Often, yes—older assets can price higher because of resale risk. The exact impact is deal-specific.
How much does term change the cost?
Longer terms reduce the monthly but can raise total paid. Match term to useful life and uptime expectations.
Can I include delivery, installation, or taxes?
Yes—rolling soft costs can smooth cash flow. It increases the financed amount; test the impact in the calculator.
Where to go from here
Compare structures across Equipment Financing, including Equipment Leases, Equipment Loans, Equipment Line of Credit, Asset-Based Lending, and Refinancing & Sale-Leaseback. If you’d like numbers tailored to your credit, asset, and timing, feel free to contact our credit analysts via Contact Us.