Asset refinancing lets you replace existing debt on equipment (or raise new debt against owned gear) to lower payments, extend terms, or unlock working capital—without taking machines out of service. In Canada, lenders commonly use four structures: a straight equipment loan/CSC refinance, a lease buyout, a sale-leaseback, or asset-based lending (ABL) secured by multiple assets. This guide explains each option, what lenders evaluate, typical advance rates, deal steps, costs, pitfalls, and smart alternatives—so you can choose the structure that fits your cash flow and ownership plan.
You can pair refinancing with Mehmi’s broader toolkit—Equipment Loans, Refinancing & Sale-Leaseback, Asset-Based Lending, Equipment Leases, and Conditional Sales Contracts. If your need is operating cash, compare Working Capital Loan and Business Line of Credit. We also sell equipment directly—browse in-house inventory and confirm eligible equipment.
What is asset refinancing?
In equipment finance, asset refinancing means using existing equipment as collateral to restructure debt or raise cash. The new lender pays off current liens or advances funds against free-and-clear assets, then registers security (PPSA). You keep using the asset while improving cash flow or liquidity.
The main ways to refinance equipment
| Structure |
What it does |
Title/Security |
Best for |
Speed |
| Rate-and-term refinance (Loan/CSC) |
Replace costly debt; extend term or improve pricing |
PPSA on unit; you retain ownership/CSC terms |
Keepers you’ll own long-term |
Fast once payoff and docs are ready |
| Lease buyout financing |
Finance an end-of-term residual or early exit |
New loan/lease replaces old; clean PPSA chain |
Known keepers with buyout due |
Fast on liquid assets |
| Sale-leaseback |
Monetize equity: sell to lender, lease back |
Lender holds title; you lease the asset |
Unlocking cash quickly while using the unit |
Very fast for mainstream gear |
| Asset-Based Lending (ABL) |
Advance against a pool of assets |
ABL lien over equipment portfolio |
Fleets and multi-asset borrowers |
Moderate; field work may apply |
Explore details: Refinancing & Sale-Leaseback · Equipment Loans · Asset-Based Lending.
When refinancing makes sense
- Lower monthly payments: Extend remaining term to right-size cash flow.
- Finance a lease residual: Avoid a big cash outlay at maturity.
- Unlock equity: Convert owned assets into working capital for payroll, fuel, parts, or expansion.
- Consolidate expensive debt: Replace MCAs/short-term notes with collateralized equipment financing.
- Clean up liens: Simplify PPSA registrations and align titles with current ownership.
What lenders evaluate (beyond the credit score)
- Collateral quality: Year, make, model, hours/kilometres, maintenance, resale demand.
- PPSA & payoffs: Existing liens, accurate payout letters, and clear discharge paths.
- Advance rate (LTV): Based on valuation method and asset liquidity.
- Cash flow & bank statements: 90–180 days for NSFs, average balances, seasonality.
- Insurance & usage: Proof of coverage and that the unit is revenue-producing.
- Time in business & industry: Experience, contract pipeline, and utilization plan.
How much can you borrow? (Indicative LTVs)
| Asset class (late-model, good condition) |
Indicative advance (LTV) |
Notes |
| Highway tractors & day cabs |
60–75% |
Sharper for low-km, popular specs |
| Trailers (dry van/reefer/flat/deck) |
60–70% |
Commodity trailers fund quickly |
| Construction (excavators, skid steers, loaders) |
60–70% |
Hours and service records matter |
| Manufacturing (CNC, fabrication) |
50–65% |
Model support and resale depth |
| Specialty/older assets |
Case-by-case, lower |
Tighter LTV and shorter terms |
Model scenarios instantly with our calculator.
Step-by-step: how an equipment refinance closes
- Scope the structure: Choose between loan/CSC refinance, lease buyout, sale-leaseback, or ABL.
- Collect payoffs & run PPSA searches: Map every lienholder accurately.
- Value the unit(s): Desktop comps or an appraisal (deal-size dependent).
- Submit a clean file: ID, void cheque, 90–180 days bank statements, insurance, quotes/serials, photos.
- Underwriting: Lender calibrates LTV, term, pricing, and any conditions (e.g., GPS, first/last).
- Documents & funding: New lender pays off existing liens or advances cash; PPSA is registered/discharged/assigned.
- Post-funding: Provide final insurance certificates; schedule any inspections/telematics required.
Costs to plan for (and how to control them)
| Cost |
Why it appears |
How to reduce impact |
| PPSA registration/discharge |
Securing and clearing liens |
Bundle into financing to avoid cash spikes |
| Documentation/processing |
Legal and admin work |
Use standardized programs when possible |
| Appraisal/inspection (if any) |
Valuation on larger tickets |
Prefer desktop valuations where acceptable |
| Original payout penalties |
Contractual break fees |
Get exact payoff letters; model net savings |
| Taxes on new structure |
Provincial rules vary |
Clarify tax treatment in advance; plan cash flow |
Pitfalls (and easy fixes)
| Pitfall |
Why it hurts |
Fix |
| Ignoring payout penalties |
Eliminates expected savings |
Include penalties in the comparison math |
| Over-advancing on older gear |
Hurts approval and pricing |
Right-size LTV or pick newer collateral |
| Stretching term beyond useful life |
Raises lifetime cost and downtime risk |
Match term to warranty and utilization |
| Messy PPSA chains |
Delays closing |
Run searches early; pre-arrange discharges |
Real-world case study (Ontario)
Situation: A carrier had two high-payment leases and needed working capital to launch a new route.
Solution: Mehmi combined a sale-leaseback on a free-and-clear trailer with a lease buyout refinance on one tractor.
Outcome: Total monthly obligations dropped ~17%, and $85,000 was released for insurance, fuel, and drivers—without interrupting service.
Alternatives when refinancing isn’t the best fit
Sector nuances: Transportation & Trucking · Construction & Contractors · Manufacturing & Wholesale · Hospitality & Food Service · Medical, Dental & Wellness.
FAQ: Asset refinancing in Canada
How does asset refinancing actually work?
A new lender advances funds against your equipment, pays off any existing liens, registers PPSA, and sets new terms. You retain use of the asset throughout.
What’s the difference between refinance and sale-leaseback?
A refinance keeps title with you (loan/CSC). A sale-leaseback transfers title to the lessor and you lease it back to release equity. See Refinancing & Sale-Leaseback.
Can I refinance a lease residual?
Yes. Use lease buyout financing or a loan/CSC to spread the residual over time. See Equipment Loans.
How fast can it close?
On liquid assets with clear PPSA paths, decisions are often delivered within 24–48 hours once your file is complete.
What credit score do I need?
650+ sees broader options; lower scores can work with newer collateral, right-sized LTV, and clean bank statements.
How much can I borrow?
Indicative LTVs range roughly 50–75% depending on asset class, age, condition, and resale depth. Model it in the calculator.
If you’d like a side-by-side for loan/CSC vs sale-leaseback vs lease buyout, with payments, LTV, and net cash-out, run your scenario in our Equipment Financing Calculator—then feel free to contact our credit analysts to tailor terms to your cash-flow and ownership plan via Contact Us. If an upgrade is part of the plan, you can also purchase directly from our inventory—we own the equipment we sell.
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