Quick answer: Compare an equipment lease quote using the full payment schedule, initial cash, purchase option and other required charges. A lease payment factor is not an annual interest rate. There is no single rate that establishes a good offer for every Canadian business, and a lower instalment can leave a larger obligation at the end.
Reviewed November 11, 2026. By Jodhbir Mehmi. Read our editorial standards.
Key takeaways
- Ask what the quoted rate or factor actually measures.
- Compare the same equipment price and intended ownership outcome.
- Count advance payments correctly and include the purchase option.
- Use a current written offer rather than an advertised market range.
Identify the number on the quotation
A quote may show a monthly payment, a payment factor or an annualized rate. Ask the provider to identify which one you have and what assumptions it includes. The same printed decimal can be misleading when taken out of its stated calculation.
If the quote defines a monthly factor as payment divided by equipment cost, multiplying that factor by the stated cost gives the monthly payment. For example, an illustrative factor of 0.025 applied to $40,000 gives a $1,000 monthly payment. That calculation alone says nothing about the number of payments or final purchase amount.
Do not multiply the factor by twelve and label the result an annual interest rate. The payment can include recovery of the equipment cost, and the full cash-flow timing matters. Ask for an explanation of any annualized comparison figure and the charges included in it.
Why a published average may not answer your question
An advertised range may refer to different equipment, business profiles or structures. Before using it as a benchmark, identify the observation date and whether it represents actual offers, a provider's selected examples or an editorial estimate.
A useful benchmark for a purchase is a current written offer based on the actual asset and business, compared with another available structure on consistent assumptions.
If your equipment is used, specialized or being sold privately, say so at the beginning. A general illustration for new dealer equipment may not describe the proposed transaction. Give the reviewer enough information to confirm the asset and seller before relying on a payment.
Hold the purchase package constant
Use the same equipment price, attachments, delivery and installation scope in each comparison. If one offer includes a different package, separate those amounts. Otherwise a difference in payment may reflect different purchases rather than different financing costs.
Ask whether the supplier price changes with the financing arrangement. Record any discount or promotion that is actually available and which conditions apply. A promotion should be evaluated with its purchase price and expiry date.
Keep the dated supplier quote with the financing offer. If either changes, update the comparison. A payment based on last month's price should not be treated as a current alternative to today's complete quote.
Compare the ownership outcome
Decide whether you intend to purchase the equipment at maturity or use it for a defined period and return it if the agreement permits. These are different outcomes. A lower payment for use alone cannot establish the cheaper route to ownership.
For a known fixed purchase option, include that amount in the ownership comparison. For an option determined later, mark the amount as uncertain and review how it will be established. Do not assume the future purchase price will equal a figure mentioned informally.
If return is the plan, review notice requirements, acceptable condition, transport responsibility and other contractual conditions. A return option has practical costs and obligations that may not appear in the monthly payment.
A worked comparison with different final payments
Suppose two illustrative offers cover the same equipment and both allow ownership after 48 monthly payments. Offer A requires $1,000 per month and a $1 purchase option. Offer B requires $850 per month and a $10,000 purchase option. Assume no upfront payments or other charges in this simplified example.
| Item | Offer A | Offer B |
|---|---|---|
| Monthly payment | $1,000 | $850 |
| Number of payments | 48 | 48 |
| Scheduled payments | $48,000 | $40,800 |
| Purchase option | $1 | $10,000 |
| Total to own | $48,001 | $50,800 |
Offer B reduces the regular payment by $150 but requires $2,799 more in total cash to reach the assumed ownership outcome. This is original illustrative arithmetic, not available pricing or an annualized-rate calculation. It shows why the final option belongs beside the monthly payment.
Timing also has value. A business may prefer a different cash schedule, but it should decide with the final obligation visible and a realistic plan to meet it. Future refinancing should not be treated as guaranteed.
Count advance payments without counting them twice
Ask whether a payment collected at signing is one of the scheduled instalments or an additional amount. For example, if the first payment is collected at signing, determine how many remain afterward. The schedule should make the total count clear.
Separate a refundable security deposit from a non-refundable payment or fee. Ask what conditions govern its return or application. Do not subtract it from the eventual cost unless the agreement supports that treatment.
Record charges due at delivery or acceptance as well. The business needs enough cash for the complete start of the agreement, not just the amount displayed as the regular payment.
Review costs that sit outside the financing quote
Ask who pays for insurance, maintenance, servicing and any required inspections. If a service package is included, identify its scope and limits. A financing arrangement does not automatically include every cost of keeping the equipment operational.
Manitoba Agriculture's lease-or-buy guidance recommends cash-flow projections before deciding. Its farm context does not establish terms for every equipment lease, but the budgeting step applies to the comparison here.
Use current supplier and service estimates for the machine you intend to operate. Keep the recurring operating budget next to the payment schedule so a low financing payment does not hide a high ongoing cash requirement.
Check early exit and quote conditions
Ask how early settlement would be calculated if you sell, replace or stop using the equipment. Obtain an explanation of the relevant contract provisions before signing. The remaining instalments or a displayed balance may not be the full payout.
Confirm the offer's expiry, outstanding documents and equipment conditions. A preliminary payment illustration is not a final approval. If the seller or asset changes, submit the revised information for confirmation.
For Mehmi's startup enquiries, six or more months of revenue in bank statements are required. That scope requirement does not establish a rate or approval. The business and transaction still require assessment.
Frequently asked questions
Is a lease factor the same as interest?
No. Confirm how the factor is defined. A payment factor by itself does not express the annual cost of financing.
Can the lowest monthly payment cost more to own?
Yes. A larger final purchase amount or additional charges can outweigh the reduction in regular payments.
Can I compare two quotes with different terms?
Yes, but show the different payment counts, final obligations and intended use period. Do not rank them by monthly payment alone.
Tools and next steps
Rebuild the worked table using your actual quotes. Review purchase-option terms and financing-channel comparisons when preparing the decision.
To discuss a current equipment quote, contact Mehmi Financial Group or call 1-833-863-4644. Approval and terms depend on assessment.
Sources
- Manitoba Agriculture, Lease or Buy: The Best Equipment Option, linked above, reviewed November 11, 2026. Used for cash-flow planning guidance only. Payment examples and the quote worksheet are original illustrations.