# Equipment Loan Calculator for Contractors (Trucks, Vans, Machinery)

An equipment loan payment is the amount financed spread over the term at the lender's APR, using the standard amortization formula. Financing $77,000 over 60 months at 8.99% APR costs $1,598.02 a month and $18,881 in total interest. Early payments are mostly interest; later ones mostly principal.

## Key takeaways

- Monthly payment = P × r ÷ (1 − (1 + r)^−n), where r is the APR divided by 12 and n is the number of months.
- A longer term lowers the payment but raises total interest. Match the term to how long the equipment will earn.
- Fees rolled into the loan raise your real cost; the calculator shows the APR including fees.
- Compare the payment with the extra gross profit the equipment produces each month, not with revenue.

> **Estimate, not financial advice**
>
> This assumes a fixed rate and equal monthly payments. Your lender's quote controls: some equipment loans have variable rates, balloon payments, prepayment penalties or payments in advance. Tax effects vary; talk to your CPA before you buy.

## How is an equipment loan payment calculated?

Lenders use the standard amortization formula: the amount financed times the monthly rate, divided by one minus the discount factor for the term. Each payment covers that month's interest on the remaining balance, and whatever's left reduces the balance. That's why the first payments barely dent the principal and the last ones are almost all principal.

**Formula**

```
Payment = P × r ÷ (1 − (1 + r)^−n)
```

Where:
- P = amount financed: price − down payment + fees rolled in
- r = monthly interest rate: APR ÷ 12
- n = number of monthly payments

1. **Enter the price and down payment.** What you finance is the difference, plus any doc or origination fees the lender adds to the loan.
2. **Enter the APR and term.** The APR on the lender's disclosure includes certain fees and is the number to compare between offers ([CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-the-difference-between-a-loans-interest-rate-and-its-apr-en-733/)). Terms of 36 to 84 months are common for vehicles and equipment.
3. **Read the payment and total interest.** The year-by-year table shows how much of each year's payments is interest versus principal, and the balance you'd owe if you sold or traded early.
4. **Test whether it pays for itself.** Enter the extra gross profit the equipment should produce each month. If the margin after the payment is thin, a used unit or a shorter term may be the better buy.

> **Worked example**
>
> A plumbing company buys an upfitted service van for $85,000, puts $8,500 down and rolls $500 of fees into a 60-month loan at 8.99% APR. Amount financed: **$77,000**.
>
> Payment: **$1,598.02 a month**. Over five years that's $95,881 in payments, of which $18,881 is interest. Counting the fee, the effective APR is 9.27%.
>
> In year one, $6,405 of the payments is interest and $12,772 reduces the balance, leaving $64,228 owed.
>
> If the van lets the company run one more tech who brings in $4,000 of gross profit a month, it covers the payment with $2,402 to spare.

## How does the term change the payment?

**Payment and interest by term ($77,000 financed at 8.99% APR)**

| Term | Monthly payment | Total interest | Total paid |
| --- | --- | --- | --- |
| 36 months | $2,448.22 | $11,136 | $88,136 |
| 48 months | $1,915.78 | $14,958 | $91,958 |
| 60 months | $1,598.02 | $18,881 | $95,881 |
| 72 months | $1,387.58 | $22,906 | $99,906 |
| 84 months | $1,238.47 | $27,031 | $104,031 |

_Computed with the calculator above. Lenders often charge a higher APR for longer terms, which widens the gap further._

Stretching from 60 to 84 months cuts the payment but adds thousands in interest, and you can end up owing more than a seven-year-old van is worth. A good rule: don't finance equipment longer than you expect it to earn.

## Loan vs. lease vs. cash

**Ways to pay for equipment**

| Option | Upside | Watch out for |
| --- | --- | --- |
| Loan | You own it; interest and depreciation are deductible; builds business credit | Down payment and fees; interest adds to the cost |
| Lease | Lower upfront cost; easy upgrades at the end | Usually costs more over time; mileage and wear limits; you don't own it unless you buy out |
| Cash | No interest, no payments | Drains the cushion you need for payroll and slow months (see the [cash runway calculator](https://www.brix.so/tools/cash-flow-runway-calculator)) |

## What about the tax deduction?

Financing doesn't reduce the deduction. Equipment you buy with a loan can qualify for [Section 179](https://www.brix.so/tools/section-179-calculator) expensing (up to $2,560,000 for 2026) or 100% bonus depreciation in the year you place it in service, even though you've only paid the down payment. The interest you pay is deductible as a business expense as you pay it. Rules differ for vehicles under 6,000 lb GVWR and for SUVs; see the Section 179 page.

## Common mistakes

- **Comparing payments instead of APR.** A lower payment on a longer term can cost thousands more.
- **Ignoring the fees.** Doc, origination and GPS fees rolled in change the real rate. Compare the APR including fees.
- **Financing against revenue, not gross profit.** The equipment has to cover its payment out of margin after labor and materials.
- **Missing prepayment terms.** Some equipment lenders charge a penalty or compute interest so that paying early saves little.
- **Letting the loan outlive the asset.** Underwater on a worn-out truck means two payments when it's time to replace it.

BRIX syncs your loan payments and equipment expenses to QuickBooks and keeps job costing current, so you can see whether the new truck is actually earning its payment.

- [QuickBooks sync](https://www.brix.so/integrations/quickbooks): Syncs customers, invoices and payments with QuickBooks so the books match the jobs.
- [Bookkeeping and tax help](https://www.brix.so/features/bookkeeping-taxes): Keeps expenses categorized, tracks 1099 subcontractors and sales tax, and reminds you of quarterly estimated tax dates. BRIX does not file taxes or give tax advice.

## Frequently asked questions

### How much is the payment on a $50,000 equipment loan?

At 8.99% APR over 60 months, about $1,037.68 a month, with $12,261 of total interest. Change the rate and term in the calculator to match your quote.

### What is a typical term for an equipment loan?

Lenders usually match the term to the useful life of the equipment, often three to seven years for vehicles and machinery. Longer terms lower the payment but increase total interest and the risk of owing more than the equipment is worth.

### What's the difference between interest rate and APR?

The interest rate is the cost of borrowing the principal. The APR adds certain lender fees, such as origination charges, so it reflects the total cost of the loan. Compare offers by APR.

### Is equipment loan interest tax deductible?

Interest on a loan used to buy equipment for your business is generally a deductible business expense in the year you pay it. The equipment itself is deducted separately through depreciation, Section 179 or bonus depreciation. Confirm with your CPA.

### Can I take Section 179 on financed equipment?

Generally yes. The deduction depends on placing qualifying property in service and using it more than 50% for business, not on how you paid for it. See the Section 179 calculator for 2026 limits and vehicle caps.

### Should I pay cash or finance equipment?

If paying cash leaves you with less than a few months of operating expenses in the bank, financing is usually safer even with the interest. Run the cash runway calculator with the purchase taken out of cash and compare.

## Related

- [Section 179 Calculator for Trucks, Vans and Equipment (2026)](https://www.brix.so/tools/section-179-calculator)
- [What Is the Section 179 Deduction?](https://www.brix.so/learn/section-179-deduction)
- [What Is Bonus Depreciation?](https://www.brix.so/learn/bonus-depreciation)
- [Cash Flow Runway Calculator for Trades Businesses](https://www.brix.so/tools/cash-flow-runway-calculator)
- [Gross Profit per Truck Calculator](https://www.brix.so/tools/gross-profit-per-truck-calculator)
- [Customer Financing Calculator: Quote a Monthly Payment](https://www.brix.so/tools/customer-financing-calculator)
- [What Is Depreciation?](https://www.brix.so/learn/depreciation)
- [Taxes for Contractors: The 2026 Guide for Self-Employed Trades Owners](https://www.brix.so/guides/contractor-taxes)
- [Contractor invoicing software that sends the invoice and chases the money](https://www.brix.so/features/invoicing-payments)
- [Bookkeeping for contractors that keeps your books tax-ready all year](https://www.brix.so/features/bookkeeping-taxes)

## Sources

- [CFPB, What is the difference between a loan's interest rate and its APR?](https://www.consumerfinance.gov/ask-cfpb/what-is-the-difference-between-a-loans-interest-rate-and-its-apr-en-733/) (checked 2026-10-12)
- [IRS Rev. Proc. 2025-32, 2026 inflation adjustments](https://www.irs.gov/pub/irs-drop/rp-25-32.pdf) (checked 2026-10-12)
- [IRS Publication 946, How To Depreciate Property](https://www.irs.gov/publications/p946) (checked 2026-10-12)

---
Written by BRIX Editorial Team. Last updated 2026-10-12. General information, not tax, legal or financial advice.
Canonical: https://www.brix.so/tools/equipment-loan-calculator