Equipment Loan Calculator
Estimate financing for business equipment from its purchase price, installation costs, down payment, trade equity, sales tax, fees, APR and optional balloon. Add estimated annual cash flow from the equipment to calculate a planning coverage ratio.
Equipment loan formulas
Base financed amount = price + add-ons + tax − down payment − trade equity
Payment = [P − B ÷ (1+r)n] × r ÷ [1 − (1+r)−n]
P is principal, B is the target balloon, r is the monthly rate and n is the number of payments. At 0% interest, payment equals (P − B) ÷ n.
Checked example
The default example uses $100,000 equipment, $5,000 installation/add-ons, $20,000 down, a $25,000 trade with a $10,000 payoff, 5% tax after trade credit, a 2% financed fee, 8.5% interest, 60 months and a $10,000 balloon. It produces $15,000 trade equity, $4,000 estimated tax, a $74,000 base amount, a $1,480 financed fee, $75,480 principal and a $1,414.26 monthly payment. Estimated interest before maturity is $19,375.35 and the entered $30,000 annual cash flow produces 1.77× planning coverage.
How trade equity and tax are handled
Positive trade equity reduces the financed amount. Negative trade equity increases it. Sales-tax treatment varies by location and transaction, so the calculator provides three explicit assumptions: tax the full price and add-ons, subtract trade value from the tax base, or enter no tax. Confirm the actual taxable amount before relying on the estimate.
Balloon and cash-flow coverage
A balloon reduces regular payments but leaves a balance at maturity. The planning coverage ratio divides the entered annual cash flow from the equipment by twelve regular payments. It does not apply a lender’s formal DSCR definition and does not prove that the equipment is profitable or that financing will be approved.
Important limits
- The model assumes a fixed nominal rate, monthly compounding and equal monthly payments.
- It excludes lender-specific daily interest, documentation charges not entered, insurance, maintenance, fuel, downtime, warranties, delivery timing and prepayment penalties.
- Tax credits, depreciation, Section 179 treatment and lease accounting are not calculated.
- The annual cash-flow input should reflect incremental cash available for debt service, not sales revenue.
- A balloon must be refinanced or paid at maturity unless extra principal has reduced the balance.
Related calculators
- Business Loan Calculator — model a general business loan, payment frequency, fees, balloon and DSCR.
- ROI Calculator — compare returns with invested cost.
- Payback Period Calculator — estimate how long cash flows take to recover an investment.
- Auto Loan Calculator — analyze a passenger-vehicle purchase with tax and trade-in.
Frequently asked questions
How is equipment loan payment calculated?
The calculator first builds the financed balance from the equipment transaction, then discounts any balloon and amortizes the remaining present value across the term.
Does negative trade equity increase the loan?
Yes. If the payoff exceeds the trade value, the negative equity is added to the amount that must be funded.
Does this compare a lease with a loan?
No. A lease-or-buy analysis needs lease payments, residual value, tax treatment, discount rate and ownership assumptions. This page models a loan only.
What does the coverage ratio mean?
It is the entered annual equipment cash flow divided by regular annual payments. It is a simple planning screen, not an underwriting result.