Canadian guide for auto repair shops to finance lifts, diagnostic tools, and shop equipment using leases and working capital.
Canadian auto repair and maintenance businesses generated $26.4 billion in operating revenue in 2023, with an average operating margin of about 9.4%. Statistics Canada That’s a decent business — but thin enough that a couple of big cash purchases can wipe out your buffer.
At the same time:
Combine older vehicles on the road with rising repair costs, and you get strong demand — but also pressure on shops to invest in:
A proper setup can easily exceed $100,000+ once you factor in installation and software subscriptions. Individual items alone can run:
If you pay for all of that in cash, you’re left vulnerable on payroll, rent, and parts. The smarter play is to finance the hard assets over their useful life, and keep your cash available for people and parts.
Key point: Long-life equipment (like lifts and alignment racks) should usually be financed over years, while consumables and everyday tools should be paid from cash flow.
Here’s the contrarian stance:
If you’re a growing shop, writing a cheque for $40,000–$80,000 of equipment is often riskier than taking on well-structured equipment financing.
Why?
A cleaner approach:
You’re not “playing it safe” by paying cash for everything — you’re shifting the risk from lenders to your staff and customers.
Key point: Leasing spreads the cost of major shop equipment over its revenue-earning life, while preserving your cash and bank line for payroll and inventory.
Leasing is particularly well-suited to:
With a Mehmi equipment lease or their broader equipment financing solutions, you can typically:
This lines your monthly payment up with the extra labour hours and revenue those new bays generate, instead of smashing your bank balance on day one.
As a rule, if it has a serial number and a clear remarketing value, there’s a good chance it falls under eligible equipment. For auto repair, that often includes:
If you’re adding a bay or refitting your shop, a Mehmi advisor can help structure vendor invoices through a vendor program so your supplier gets paid in full and you make regular lease payments instead.
Key point: Treat lifts as core, long-life assets — finance them over time, and focus on uptime and safety, not just sticker price.
Lifts are the backbone of your bay count and your labour hours. A couple of opinions from the credit side:
Typical options for lift financing:
For shops that also service or upfit trucks, Mehmi’s truck repair financing can cover heavy-duty lifts and specialized gear tailored to fleets and commercial vehicles.
Key point: High-end scan tools and software are essential but depreciate quickly; use financing to spread the hit, and avoid locking yourself into obsolete tech.
Modern vehicles use complex electronics, ADAS systems, and manufacturer-specific codes. Generic tools aren’t enough anymore, and advanced diagnostic setups can look like this:
Three common approaches:
My opinion: it’s better to lease a proper OEM-level setup and actually fix vehicles in one shot than limp along with underpowered tools and lose customers.
Key point: Group your “hard” shop equipment into one financing plan so you don’t end up with five different micro-loans and messy payments.
Outside of lifts and scan tools, a modern garage needs a full ecosystem:
Canadian guides put “essential tools” alone in the ballpark of $15,000+, with lifts and diagnostic machines adding tens of thousands more as you grow. AutoLeap
Instead of financing each piece piecemeal, a Mehmi advisor can help you:
You end up with one clear monthly payment for the hardware that makes your bays productive, instead of a jumble of vendor finance deals and high-rate cards.
Key point: If you already own good equipment, you may not need a new bank loan — you might just need to unlock equity tied up in your shop.
Many established garages have tens or hundreds of thousands of dollars of paid-off equipment on the floor:
Two underused tools:
This is especially useful if your bank is tapped out or not keen on auto-sector exposure, but your shop floor is full of good-quality gear.
Key point: Lifts, racks, and scanners should be on equipment facilities; payroll, inventory, and software updates should sit on working-capital facilities. Mixing them is where shops get into trouble.
Once the gear is handled, you still have to manage:
Here’s how the main working-capital tools fit a typical Canadian garage.
<html><table><thead><tr><th>Need</th><th>Best-fit tools</th><th>Usually avoid</th></tr></thead><tbody><tr><td>Day-to-day cash swings</td><td>Business <a href="https://www.mehmigroup.com/services/business-loans/line-of-credit">line of credit</a></td><td>Long-term term loans for small gaps</td></tr><tr><td>Planned expansion (new tech, marketing)</td><td><a href="https://www.mehmigroup.com/services/business-loans/working-capital-loan">Working capital loan</a>, possibly <a href="https://www.mehmigroup.com/services/business-loans/secured-loan">secured</a></td><td>Maxing personal credit cards</td></tr><tr><td>Card-heavy revenue (small quick-service shops)</td><td>Carefully structured <a href="https://www.mehmigroup.com/services/business-loans/merchant-cash-advance">merchant cash advance</a></td><td>Using MCAs for long-life equipment</td></tr><tr><td>Slow-paying fleet accounts</td><td><a href="https://www.mehmigroup.com/services/business-loans/invoice-freight-factoring">Invoice factoring</a> on approved receivables</td><td>Borrowing against your home to carry receivables</td></tr></tbody></table></html>
Mehmi’s business loans overview gives you the high-level menu, but in practice you might combine:
One strong opinion here: don’t use a 5-year loan or lease just to plug a short-term cash hole. That’s how otherwise good shops end up over-leveraged two years later.
Key point: You don’t need perfect books, but you do need a clear story, stable cash flow, and proof that new equipment will actually generate revenue.
For lifts, diagnostics, and shop equipment, lenders usually focus on:
A good advisor (like Mehmi) will help you package:
Then they’ll run the numbers with tools like Mehmi’s calculator so you’re not guessing at payment levels.
Key point: Don’t wait until the lift installer is booked and the scanner is on promo — map your financing before you sign equipment quotes.
Here’s a practical roadmap for a Canadian shop owner:
Write it down. Lenders react better to a clear plan than “we’re just upgrading equipment.”
List each item with rough cost:
Separate what’s clearly financeable equipment (with a serial number) from softer items that might fit better in working capital.
As a rule of thumb:
Your Mehmi advisor can map these into a lease versus a working capital loan or unsecured loan for the softer pieces.
Use the Mehmi calculator to:
If the numbers only work in a “perfect month”, the plan needs tweaking.
Once you have:
…your advisor can help you obtain pre-approvals on both equipment and working capital facilities. That way, when the vendor is ready to ship, the financing is already lined up.
It’s tempting to say yes to in-house vendor financing, a bank loan, and a quick online cash advance — and end up with three lenders double-secured on the same assets.
Working with a single partner such as Mehmi to structure:
…reduces nasty surprises and keeps your security structure clean. When you’re ready, you can reach out via Contact Us and walk through your plan with a Canadian credit specialist.
Key point: The right equipment financing mix can double bay count and add revenue without blowing up cash flow.
A real-world style example (details changed for privacy):
The shop
The opportunity
Demand was strong. The owner wanted to:
Total equipment, install, and minor renovations priced around $180,000.
The financing plan
Working with a Mehmi advisor, they structured it as:
The outcome
Within 12 months of the upgrades:
The key wasn’t a single product — it was pairing the right equipment financing for the hard assets with sensible working capital tools for people and parts.
For most growing shops, leasing big-ticket equipment (lifts, racks, diagnostic platforms) makes more sense than buying outright. A Mehmi equipment lease lets you spread costs over 3–7 years while preserving cash for payroll and inventory. Buying in cash can make sense for smaller items or when you’re already very cash-rich and stable.
You can often finance used equipment, especially from reputable brands, as long as the condition is good and the lender can get comfortable with its resale value. Mehmi can review your list against their eligible equipment criteria and suggest whether a lease, asset based lending, or refinancing/sale-leaseback makes the most sense.
Yes, usually the hardware (scanner, laptop, interface modules) can be financed under an equipment facility. Ongoing software subscriptions and updates are typically treated as operating expenses and funded from cash flow or a working capital loan. Talk to a Mehmi advisor about bundling install and training costs into the same equipment financing package where possible.
Start-ups can still get equipment financing, but lenders will lean heavily on:
For very new shops, the first step might be smaller leases on essential equipment plus a modest unsecured loan or secured loan for fit-out costs. Mehmi works with a range of funders and can help position your file even if you’ve just launched.
Often, yes — many lenders will let you include certain soft costs (freight, installation, electrical work directly tied to equipment) within the financed amount, especially when you’re adding bays or moving into a new building. This is where an equipment line of credit shines: you can draw once the full vendor and contractor invoices are in. A Mehmi advisor can help you structure this so you’re not over-financing work that doesn’t add lasting value.
If your cash is tied up in slow-paying receivables, but your equipment is in place, consider:
Mehmi can review where your cash is stuck and design a mix of equipment and working capital facilities so you can fund both steady operations and your next upgrade.
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