Refinancing is just swapping your current debt for a new one that fits better—usually to lower your payment, cut total cost, or free up cash. In equipment-heavy businesses, that might mean replacing a costly loan, financing a lease buyout, or doing a sale-leaseback to unlock equity while you keep using the machine. Below is a straightforward, Canada-focused walkthrough so you can decide quickly and confidently.
If you’re comparing options now, explore Business Refinancing, Equipment Loans, Equipment Leases, Conditional Sales Contracts, and Refinancing & Sale-Leaseback. We also sell equipment directly—see our in-house inventory and confirm your asset on Eligible Equipment.
The simple definition
Refinancing means replacing your current agreement with a new one—often with a different term, rate, or structure. The new lender pays off the old one, registers security, and you start making the new payments. You keep the equipment working during the changeover.
Common goals:
- Lower the monthly payment to stabilize cash flow.
- Reduce total cost (interest + fees) versus the existing contract.
- Unlock working capital tied up in paid-down equipment.
- Change structure (for example, turn a lease residual into a loan you’ll keep for years).
- Clean up liens and simplify your debt picture.
The main ways to refinance (in plain English)
| Option |
What it does |
Best when |
Learn more |
| Rate-and-term refinance (equipment loan / CSC) |
Swap a high-cost loan/lease for a new amortizing loan with better fit |
You’ll keep the asset long-term |
Equipment Loans · CSC |
| Lease buyout financing |
Finance an end-of-term residual instead of paying cash |
The unit’s a “keeper,” buyout is coming due |
Equipment Leases |
| Sale-leaseback |
Sell equipment to a lender and lease it back to release equity |
You need cash quickly but must keep using the gear |
Refinancing & Sale-Leaseback |
| Asset-Based Lending (ABL) |
Borrow against a pool of equipment for a larger advance |
You have multiple units and broader cash needs |
Asset-Based Lending |
For non-equipment needs (e.g., consolidating short-term debt), see Business Refinancing, a Working Capital Loan, or a Business Line of Credit.
How refinancing works step-by-step
- Check the true payoff. Get a payoff letter for your current loan/lease, including any prepayment penalties and fees.
- Pick the structure. Decide whether a straight loan/CSC, a lease buyout finance, a sale-leaseback, or an ABL facility best matches your plan to keep/upgrade assets.
- Value the asset(s). Lenders use desktop comps or appraisals depending on size and age. Liquid, late-model assets are fastest.
- Submit a clean file. Typical items: ID, void cheque, 90–180 days of bank statements, insurance, serials/specs, photos, and invoices/quotes.
- Underwriting and approval. The lender calibrates term, price, loan-to-value (LTV), and any conditions (e.g., GPS or first/last).
- Funding and lien work. The new lender pays off the old lender, registers PPSA, and funds; you keep the unit in service.
- Post-funding. Provide final insurance certificates and meet any conditions. You’re done.
Want to preview payments? Use our calculator to model 48 vs 60 months, balloon/buyout financing, and rolling taxes or installation.
The two-minute test: is refinancing worth it?
- Total cost check: Compare your remaining payments + payoff/fees on the old deal to all new payments + new fees (minus any cash you receive if doing a sale-leaseback).
- Cash-flow check: If the new term meaningfully reduces payment without stretching beyond the asset’s useful life, it’s a win.
- Structure fit: Keeper assets pair well with Equipment Loans or CSC. If you upgrade often, a lease or sale-leaseback can keep monthly low and options open.
When refinancing is not a good idea
- Break costs erase savings. Some contracts have steep prepayment penalties—run the math before you move.
- Debt outlives the asset. Don’t extend the term far beyond warranty or realistic hours/kilometres.
- You really need revolving cash, not a longer term. If the issue is variable expenses (fuel, payroll, parts), a Line of Credit or Invoice/Freight Factoring may be cheaper and faster than stretching an equipment contract.
- Weak or specialty collateral. Older assets with thin resale markets may lead to low advances and higher pricing. In that case, consider Asset-Based Lending across multiple units or purchase a more liquid unit from our inventory.
Simple scenarios
Lease buyout, made easy: You have a reefer trailer with an FMV buyout due. Instead of paying a lump sum in cash, you finance the buyout over 48–60 months as an equipment loan/CSC. Monthly is manageable, the asset stays in service, and title ends with you.
Cash-out without downtime: You own a late-model excavator free and clear but need funds for a new contract start-up. A sale-leaseback releases equity quickly. You lease the same machine back, keep working, and use the cash for labour, fuel, and permits.
Lower payment and clean liens: You’ve got a high-payment loan and messy PPSA history. A rate-and-term refinance consolidates to one clean registration and a right-sized monthly aligned to the machine’s remaining life.
Avoidable pitfalls (and quick fixes)
- Ignoring payout penalties: Always get the exact payoff in writing and include it in your comparison.
- Chasing the lowest monthly only: Lowest monthly can mean higher lifetime cost. Balance payment with term and useful life.
- Messy documentation: Incomplete bank statements or missing insurance stalls approvals. Submit a clean package once.
- Stacking liens: Leave room for future purchases by coordinating lien positions or using an Equipment Line of Credit for repeat buys.
Alternatives when refinancing isn’t the best fit
Browse industry-specific guidance for Transportation & Trucking, Construction & Contractors, and Manufacturing & Wholesale.
FAQ: Refinancing in simple terms
What is refinancing, really?
It’s replacing your current debt with a new agreement that better fits your budget or goals.
Will my payment always go down?
Often, yes—if you extend term or get better pricing. But check total cost; a longer term can mean you pay more overall.
Can I refinance if I still owe money?
Yes. The new lender pays off the old one directly and registers a new PPSA.
Do I need perfect credit?
Not necessarily. Clean bank statements, newer liquid equipment, and a reasonable LTV matter a lot. See Asset-Based Lending if you have multiple units.
What if I have a lease with a buyout coming up?
You can finance the residual with an Equipment Loan or CSC.
How fast can I get an answer?
With a complete file, clear answers are typically provided within 24–48 hours on liquid assets via our lender network.
If you want a side-by-side keep vs refinance vs sale-leaseback with real payments, total cost, and cash-out, run your numbers in the calculator—then feel free to contact our credit analysts via Contact Us.
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