Good Interest Rate for an Equipment Lease

Leasing is a smart way to put revenue-producing equipment to work without draining cash. But the question “what’s a good rate?” is only half the story. Because equipment leases are often quoted with a lease rate factor (a small decimal that estimates payment) rather than an APR, a “good” rate depends on your structure (term, residual/buyout, fees), your asset (type/age/liquidity), and your file strength (credit, cash flow, bank statements). This guide breaks down realistic Canadian benchmarks, explains factor vs APR, and shows how to negotiate the lowest sustainable cost—without surprises at end-of-term.

Leasing is one option inside our broader equipment financing toolkit alongside equipment loans, an equipment line of credit, and refinancing & sale-leaseback. Mehmi also owns the equipment we sell—browse current inventory and confirm your asset on Eligible Equipment.

What counts as a “good” lease rate in 2025?

For solid Canadian SME files on mainstream, liquid equipment, a good APR-equivalent typically lands in the high single digits on 48–60-month terms. Average files price higher; challenged credit or niche assets price higher still. The ranges below are directional, not quotes, and assume standard structures.

If you prefer ownership from day one, compare with Equipment Loans; for lower monthlies and end-of-term flexibility, see Equipment Leases or Conditional Sales Contracts.

Why “rate” on a lease can mislead

Most equipment leases are quoted using a Lease Rate Factor (LRF)—a decimal like 0.020–0.028. The shortcut:

Estimated Monthly Payment ≈ LRF × Financed Amount

That factor is not an interest rate. It bakes in assumptions about term, residual/buyout, timing, and sometimes fees. Two quotes with the same factor can produce very different APRs and lifetime costs if one has a high FMV residual and the other has a fixed 10% buyout plus fees. When comparing, always normalize the structure.

What actually moves your rate (and payment)

• Credit & financials: Clean statements, steady revenue, and liquidity lower risk.
  
  
• Asset type & age: Newer, liquid assets (class-8 tractors, popular excavators, CNC, forklifts, trailers) price better than older specialty gear.
  
  
• Term: Longer terms reduce monthly but may increase total paid; match term to useful life/warranty.
  
  
• Residual / buyout: Higher residual lowers monthly now but creates a buyout later; plan cash or financing.
  
  
• What you finance: Rolling delivery, installation, and taxes smooths cash but increases the financed amount.
  
  
• Upfronts: First/last or a modest down/security can sharpen pricing, especially for startups via In-House Financing.
  
  

What’s “good” for your file? Normalize the quotes first

To judge if a quote is truly good, compare structure for structure. Use this four-step check:

• Same term: Compare 48 vs 48, 60 vs 60.
  
  
• Same end-of-term: FMV vs FMV, or 10% residual vs 10% residual.
  
  
• Same financed amount: Equipment only vs equipment + soft costs (delivery/installation/taxes).
  
  
• Same fees & timing: Upfronts, first/last, and documentation.
  
  

Once normalized, ask the funder to show the APR-equivalent beside the factor. Or model it yourself in our calculator.

Examples: how structure changes “good” pricing

If you decide you want title from day one, run the same asset as a loan and compare sum of payments + residual versus loan payments + CCA/interest after-tax.

How to lower your APR-equivalent without painting yourself into a corner

• Pick liquid collateral. Mainstream transportation, construction, and material-handling gear usually prices best. Explore Transportation & Trucking, Construction & Contractors, and Manufacturing & Wholesale.
  
  
• Right-size the residual. FMV trims monthly but creates decision risk; fixed or % buyouts give ownership certainty.
  
  
• Align term to useful life. Don’t outlive warranties just to shave dollars off the payment.
  
  
• Use modest upfronts. First/last or a small security can improve pricing, especially for newer businesses using In-House Financing.
  
  
• Plan the buyout now. If you’ll keep the asset, pre-plan to finance the residual via an equipment loan or unlock equity later with sale-leaseback.
  
  
• Consider a revolving approach. Frequent buyers can reduce repeat underwriting with an equipment line of credit; for larger liquidity needs, explore asset-based lending.
  
  

Sector-specific programs can also help: Hospitality & Food Service (rent-to-own or FMV on fit-outs) and Medical, Dental & Wellness (tech refresh cycles).

Case study: Lower monthly vs lowest lifetime cost

Situation: A GTA carrier needed two straight trucks with liftgates before peak. Bank loan quotes were competitive but required a larger upfront and produced higher monthlies.
Approach: We presented three normalized options on the same ticket: FMV lease, 10% residual lease, and loan.
Decision: The operator picked the 10% residual lease to keep payments manageable and preserve cash for drivers and insurance. They pre-approved an equipment loan to finance the residual at maturity. Net effect: on-time delivery, better cash coverage during peak, and a clear path to ownership.

FAQs: Good lease rates in Canada

What is a good interest rate for an equipment lease?
For strong files on mainstream assets, a high single-digit APR-equivalent is a good outcome on 48–60-month terms. Always compare normalized structures, not just the headline factor.

Is a lower lease factor always better?
Not necessarily. A lower factor with a high FMV residual can look cheap monthly but cost more after the buyout. Normalize the term, residual, and financed amount, then request the APR-equivalent.

How do I compare a lease to a loan?
Model both in the calculator. Compare sum of payments + buyout (lease) versus loan payments + tax effects (CCA/interest). If you plan to keep the asset long term, the loan can win on lifetime cost.

Can I lease used equipment?
Often yes—subject to age/condition and resale liquidity. Start with Eligible Equipment or purchase directly from our inventory (we own the equipment we sell).

What if my credit is thin or I’m a startup?
Consider newer collateral, reasonable terms, and modest upfronts. Our In-House Financing can help structure approvals quickly.

How fast can I get numbers?
Once we have your quote/specs and basic financials, we aim for clear answers within 24–48 hours. You can start by contacting us below.

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Run side-by-side numbers (FMV vs fixed/% residual vs loan) in our Equipment Financing Calculator, then feel free to contact our credit analysts for a tailored structure that balances the lowest sustainable monthly with your ownership plan via Contact Us.

If you’re shopping trucks, browse our used inventory first—we sell directly and can pair purchase and financing in one workflow.