The quick definition
Equipment leasing lets your business use essential assets (trucks, machinery, kitchen equipment, medical devices, IT) for a fixed term with predictable payments—without paying the full price upfront. You conserve cash, match costs to revenue, and often keep the option to purchase the asset at the end.
Leasing is one of the core solutions in our Equipment Financing suite alongside Equipment Loans, Equipment Line of Credit, Refinancing & Sale-Leaseback, and Asset-Based Lending.
How equipment leasing works (Canada)
- Select the asset. Choose from Mehmi’s in-house inventory or other eligible assets listed on Eligible Equipment.
- Structure the lease. Term (e.g., 24–72 months), payment schedule, and end-of-term option (buy, renew, or return).
- Make fixed payments. Payments are typically level and can often be treated as an operating expense for tax purposes (confirm with your accountant).
- End-of-term decision. Buy the asset via a fixed or percentage buyout, extend the lease, or return/upgrade.
Use our calculator to estimate monthly payments and compare term options.
Common lease structures (and when to use them)
Fair Market Value (FMV) / Operating-style lease
- Goal: Lowest monthly payment and flexibility at end of term.
- End-of-term: Buy at fair market value, return, or renew.
- Best for: Rapidly changing tech, medical devices, IT, or where upgrades are likely.
- Tip: Useful when you prioritize cash flow and refresh cycles.
$10 or Fixed-Value Buyout (Finance/lease-to-own)
- Goal: Own the asset at term end with a nominal or pre-agreed buyout.
- End-of-term: Buy for a token amount (e.g., $10) or a fixed percent (e.g., 10%).
- Best for: Long-life assets you plan to keep (e.g., yellow iron, trucks, production machinery).
Percentage Buyout (e.g., 10% residual)
- Goal: Lower payments during the term with a known buyout.
- End-of-term: Purchase for the agreed percentage or return.
- Best for: Balancing affordability now with a clear path to ownership later.
Conditional Sales Contracts (CSC)
- Goal: Finance structured like a lease but treated more like a loan in some respects.
- Best for: Straightforward path to ownership with familiar lease documentation.
- Learn more: Conditional Sales Contracts
Lease vs loan vs sale-leaseback (at a glance)
| Option |
Ownership During Term |
Monthly Payment |
Upfront Cash |
End of Term |
Typical Use Case |
| Lease (FMV) |
Lessor |
Lowest |
Low to Moderate |
Buy at FMV, renew, or return |
Tech/medical gear, upgrades expected |
| Lease (Fixed or $10 buyout) |
Lessor |
Lower than loan (often) |
Low to Moderate |
Purchase for fixed amount |
Assets you’ll keep long-term (e.g., trucks, iron) |
| Loan |
Borrower |
Moderate |
Down payment commonly required |
Own outright |
When building equity/ownership is priority |
| Sale-Leaseback |
Lessor (you lease it back) |
Varies |
Cash received up front |
Buyout, renew, or return |
Unlock cash from equipment you already own |
Explore structures in depth:
Equipment Leases · Equipment Loans · Refinancing & Sale-Leaseback
Who benefits most from leasing?
What drives the lease payment?
- Asset type & age: New/high-resale assets often price better than specialized or very old units.
- Term length: Longer terms reduce the monthly but increase total paid.
- Residual/buyout: Higher residuals lower the monthly; ensure the end-of-term option fits your plan.
- Credit profile & time in business: Startups can still qualify with the right structure (down payment, guarantees, or In-House Financing).
- Taxes & fees: Provincial sales tax and admin/registration fees should be included in your estimate.
- Utilization: Lenders prefer assets with obvious revenue-generation and good secondary market demand.
Run scenarios with the calculator (e.g., 48 vs 60 months, with/without residual).
When leasing beats buying (and when it doesn’t)
Leasing wins when:
- Cash flow is tight but you must onboard equipment now.
- You expect to upgrade frequently.
- You want to preserve working capital for payroll, fuel, materials, or marketing (supplement with Working Capital Loan or a Business Line of Credit).
Buying (loan) wins when:
- You’ll keep the asset for many years and want to maximize equity.
- Custom/specialized equipment holds value to your operation long-term.
- You can support a larger down payment and still keep adequate liquidity.
Not sure? Blend strategies. For example, finance your core, long-life assets via a loan and lease fast-changing or project-specific gear. If you already own equipment, Refinancing & Sale-Leaseback can inject cash to expand.
The step-by-step process with Mehmi
- Choose an asset. Browse Mehmi’s inventory (we own the equipment we sell).
- Estimate payments. Model terms and buyouts using the calculator.
- Apply. Share basic business details; we tailor structure and term options. Start at Contact Us.
- Approval & documents. Fast decisions (often 24–48h) with clear terms.
- Fund & deliver. We coordinate closing and delivery; payments begin per schedule.
- End-of-term. Buy, renew, or return—your choice.
If expansion requires additional liquidity, pair your lease with a Term Loan or Asset-Based Lending.
Case study: Lease-to-own that paid for itself
Business: Regional restaurant group (Ontario)
Need: Replace aging ovens and refrigeration across two locations; preserve cash for staffing and marketing.
Approach: Mehmi structured a fixed-buyout lease over 60 months via our Equipment Leases program, rolling installation and delivery into the financed amount.
Result: Monthly payments were offset by efficiency gains (reduced downtime/energy cost) and higher capacity. At term end, the client exercised the small buyout and owned the equipment. They kept a Working Capital Loan on standby for seasonal needs but rarely drew on it.
FAQs: Equipment leasing in Canada
What exactly is equipment leasing?
A financing agreement where you make fixed payments to use equipment for a set term, with options to buy, renew, or return at the end. See Equipment Leases.
Is leasing cheaper than buying?
Leasing often delivers lower monthly cost and preserves cash. Buying (loan) may deliver lower total cost if you keep the asset for many years. Compare with our calculator.
Can I lease used equipment?
Yes—subject to age/condition and secondary-market strength. Check Eligible Equipment or browse our inventory.
How do buyouts work?
Your agreement specifies end-of-term options: FMV, fixed amount (e.g., $10), or a set percentage (e.g., 10%). Learn about Conditional Sales Contracts for lease-to-own pathways.
What if I already own equipment and need cash?
Consider a Refinancing & Sale-Leaseback—unlock equity while keeping the asset in service.
Do startups qualify?
Often yes—with the right structure (down payment, guarantees, or In-House Financing). We also tailor options by sector: Transportation, Construction, Manufacturing, Hospitality, Medical/Dental.
Ready to run numbers?
Use the Equipment Financing Calculator to compare lease vs loan and see how residuals change your monthly. If you’d like tailored terms for your asset and industry, feel free to contact our credit analysts via Contact Us.
Are you looking for a truck? Look at our used inventory.
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