Is Refinancing Worth It?

Refinancing swaps your current agreement for a new one that fits better. The win comes from lower total cost, safer monthly cash flow, or unlocking equity—without outliving the asset. Use this 10-minute, numbers-first framework.

Step 1 — Get your “all-in” payoff

Ask your current lender for a payoff letter showing remaining balance, prepayment penalties, and any discharge fees. You’ll compare this to the new structure. If you’re evaluating multiple paths (loan/CSC, lease buyout, sale-leaseback), skim these pages:

• Business Refinancing
  
  
• Equipment Loans
  
  
• Conditional Sales Contracts
  
  
• Refinancing & Sale-Leaseback
  
  
• Equipment Leases
  
  

Step 2 — Build two stacks of cash flows (old vs new)

Open our calculator and model:

• Old deal (from today): remaining payments + payoff/fees.
  
  
• New deal: all new payments + new fees − any cash you take out (sale-leaseback/ABL).
  
  

If New Total < Old Total, or if cash-flow safety improves materially without over-extending term, refinancing is likely worth it.

Step 3 — Run the “useful life” test

Match the term to the machine’s remaining life (hours/km/warranty). If the debt will outlive the asset, you risk repair downtime and negative equity. If you’ll keep the asset long-term, ownership-style options often fit better: Equipment Loans or CSC.

Step 4 — Calculate payment relief and breakeven

If the breakeven is long and total cost rises, skip the refinance.

Step 5 — Sanity-check structure risk

• Liens (PPSA): Messy chains delay funding. Clean them up early.
  
  
• Covenants & add-ons: GPS, reserve accounts, reporting—fine if they fit operations.
  
  
• Tax/accounting (sale-leaseback): Confirm with your accountant before you proceed. See Refinancing & Sale-Leaseback.
  
  

Step 6 — Consider your real goal

• Lower monthly only? Extend term, but keep it within useful life.
  
  
• Lower lifetime cost? Focus on rate/fees and avoid unnecessary term stretch.
  
  
• Cash for operations? A refinance might not be the cheapest tool. Compare:
  
  
  
  • Business Line of Credit
    
    
  • Working Capital Loan
    
    
  • Invoice/Freight Factoring
    
    

If you own multiple units and need a larger advance, consider Asset-Based Lending.

Quick go/no-go checklist

• Math win? New total (payments + fees − cash out) is lower than old total.
  
  
• Cash-flow win? Payment relief improves coverage without outliving the asset.
  
  
• Operational fit? Covenants and lien structure won’t choke future purchases.
  
  
• Speed & certainty? Liquid collateral, clear PPSA path, insurance ready.
  
  
• Plan B? If the asset’s a keeper, line up a loan/CSC; if upgrades are frequent, a lease or sale-leaseback can keep options open.
  
  

Mini case study (Ontario)

A hauler faced a 10% lease residual on a late-model tractor. Options: pay cash, renew the lease, or refinance the buyout into a 60-month loan/CSC. After modeling totals (including payout fees) in the calculator, the refinance cut monthly by ~14%, kept term within useful life, and reduced lifetime cost. Liens were cleaned at closing; insurance rolled over same day.

FAQs

How do I compare apples-to-apples?
Normalize term, buyout/residual, and what’s financed (equipment vs equipment + taxes/install). Then compare totals in the calculator.

What if I mainly need cash, not a new term?
Use a revolving Line of Credit or Invoice/Freight Factoring; don’t over-stretch equipment debt.

Can I refinance multiple assets at once?
Yes—via Asset-Based Lending or a coordinated set of loans/leases.

Do startups qualify?
Often—with newer, liquid equipment and modest upfronts. See Equipment Leases and our In-House Financing.

Where can I confirm the asset qualifies?
Check Eligible Equipment (we also sell equipment directly via our inventory).

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Want a side-by-side keep vs refinance vs sale-leaseback with real payments and totals? Run your numbers in the calculator and feel free to contact our credit analysts via Contact Us.