See typical equipment loan and lease rates in Canada, what drives pricing, and how to lower your cost. Model scenarios and compare options.
When owners ask for the “average interest rate” on an equipment loan, they’re really asking two things: what most businesses pay today and what they will likely pay given their profile. In Canada, approved small–mid sized businesses commonly see about 7%–14% APR on equipment loans, while leases often map to a ~7%–13% cost band depending on credit, asset type, term, and structure. The spread exists because lenders price risk (credit, time in business, cash flow) and collateral strength differently across industries.
Below is a practical guide—how rates are formed, what moves them up or down, and the fastest ways to get your payment where it needs to be. If you already have a unit in mind, run quick scenarios with our Equipment Financing Calculator and compare outcomes for loans versus leases.
Lenders start with a cost-of-funds baseline and add risk and servicing margins tied to your file. That’s why two firms with the same asset can receive different offers.
Here’s a directional view of where Canadian borrowers tend to land:
Key drivers: personal/business credit, time in business, bank cash flow, equipment age/resale strength, down payment, guarantors, and overall leverage.
If you want a revolving option for multiple purchases across the year, compare a dedicated equipment line of credit.
The lowest monthly payment isn’t always the lowest effective cost. Loans build equity steadily; leases can defer principal via a residual.
Explore options:
Run the impacts instantly with the calculator—toggle term, residual, and down payment to see deltas in seconds.
Different sectors carry different risk/remarketing dynamics:
Buying from Mehmi? We sell equipment directly—review live units here: Inventory.
Are you looking for a truck? Look at our used inventory.
Situation: A Toronto contractor needed a used wheel loader (~$165k) plus attachments. The best external quote was an 60-month loan at a double-digit APR due to short time in business.
Approach with Mehmi:
Outcome: Monthly payment dropped materially versus the original loan quote, cash reserves improved, and the company won a municipal contract that required both attachments—without stretching day-to-day liquidity.
What is the average interest rate on an equipment loan?
Most approved Canadian SMEs see ~7%–14% APR on loans; leases often map to ~7%–13% effective cost, driven by credit, asset, and structure.
Are rates fixed or variable?
Both exist. Fixed terms are common for loans/leases; revolving facilities like an equipment line of credit can be variable.
Can startups qualify at reasonable rates?
Yes—with down payment, collateral or guarantor support, solid projections, and sometimes in-house financing.
Do used assets cost more to finance?
Often slightly, due to depreciation/remarketing risk—but structure (term/residual) can offset the impact.
Should I lease or get a loan?
If you’ll keep the asset long-term and want straight-line ownership, start with a loan. If cash flow is king or tech changes fast, compare a lease with a modest residual.
What if I also need working cash for ramp-up?
Blend your equipment facility with a Working Capital Loan or Invoice/Freight Factoring to cover launch costs and slow receivables.
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