Understanding Your Equipment Financing Options

When acquiring equipment, you generally have two paths: buy it (through a loan or $1 buyout lease) or lease it (through an FMV lease). Each option has different financial implications for your business, and the right choice depends on how you plan to use the equipment and your business goals.

When Buying Makes Sense

• You plan to keep the equipment for its full useful life
• You want to build equity in the asset
• You want to take advantage of Section 179 and depreciation deductions
• The equipment holds its value well over time

When Leasing Makes Sense

• You upgrade equipment frequently (every 2-3 years)
• You want lower monthly payments
• You prefer off-balance-sheet financing
• The equipment depreciates quickly or becomes obsolete

The Hybrid Option: $1 Buyout Lease

A $1 buyout lease acts like a loan but is structured as a lease. You make monthly payments over the term, and at the end, you purchase the equipment for just $1. You get the tax benefits of ownership (Section 179 and depreciation) while using a lease structure. This is one of the most common financing structures in heavy equipment and commercial trucks.

What Is Section 179?

The Section 179 deduction allows businesses to deduct the full purchase price of qualifying equipment and software placed in service during the tax year. Instead of depreciating the cost over several years, you write off the entire amount in year one. For 2026, the maximum deduction is $2,560,000. This is one of the most valuable tax incentives available to small and mid-size businesses.

2026 Section 179 Limits

• Maximum deduction: $2,560,000
• Phase-out threshold: $4,090,000 (deduction reduces dollar-for-dollar above this)
• Fully phased out at: $6,650,000
• Bonus depreciation: 100% for qualified property acquired and placed in service after January 19, 2025
• SUV cap (6,000-14,000 lbs GVWR): $31,300
• Vehicles over 14,000 lbs: No cap (treated like equipment)
• Deadline: Equipment must be placed in service by December 31, 2026

What Qualifies?

New and used equipment qualifies for Section 179, including machinery, commercial trucks, trailers, construction equipment, farm equipment, office furniture, computers, and business software. The equipment must be purchased (not rented) and must be used more than 50% for business purposes. If business use drops below 50% in any year, a portion of the deduction must be recaptured.

Section 179 and Equipment Financing

You do not need to pay cash to take advantage of Section 179. Financed equipment qualifies for the full deduction. This means you can finance a $100,000 piece of equipment, put $10,000 down, and still deduct the full $100,000 in year one. This makes equipment financing one of the most powerful tools available for reducing your tax liability while preserving cash flow.

Section 179 vs Bonus Depreciation

Section 179 is elective, meaning you choose how much to deduct (up to the limit). Bonus depreciation is automatic and applies to the remaining depreciable basis after Section 179 is applied. You can use both in the same year. Apply Section 179 first to the amount you choose, then bonus depreciation covers the rest. Together, they can often allow you to write off 100% of your equipment cost in year one.

Common Mistakes to Avoid

• Not placing equipment in service before the December 31 deadline
• Not tracking business use percentage accurately throughout the year
• Exceeding the $4,090,000 phase-out threshold without proper tax planning
• Assuming leased equipment qualifies (only financed/purchased equipment does)
• Not consulting a tax advisor before making large equipment purchases

Use our Section 179 Calculator to estimate your potential tax savings.

What Is Equipment Financing?

Equipment financing is a way for businesses to acquire equipment without paying the full cost upfront. Instead, you make monthly payments over a set term. At the end, depending on the type of financing, you either own the equipment or have the option to buy, return, or upgrade. It allows businesses of all sizes to get the tools they need to operate and grow.

How Does It Work?

What Do I Need to Qualify?

• Credit score: We work with all credit profiles from A+ to C.
• Time in business: Startup programs are available for new businesses.
• Equipment details: Know what you want to buy, the price, and the seller.
• Down payment: Varies by credit profile and lender, from $0 to 25%.

How Long Does It Take?

Same-day decisions on many applications*. Funding in as little as 24-48 hours after approval*. More complex deals involving larger amounts, multiple units, or unique credit situations may take longer.

What Does It Cost?

Rates vary based on your credit profile, time in business, and equipment type. Typical ranges:

• A-credit (700+): 7-14%
• B-credit (600-699): 10-20%
• C-credit (below 600): 15-30%

Down payments range from $0 to 25% depending on credit and lender requirements.

New vs Used Equipment

We finance both new and used equipment. There are no age restrictions on trucks, trailers, or yellow iron equipment. Used equipment may have slightly different terms or require a larger down payment, but it is absolutely financeable.

What Types of Equipment Can Be Financed?

Commercial trucks, dump trucks, excavators, loaders, trailers, tow trucks, bucket trucks, farm equipment, construction equipment, medical equipment, restaurant equipment, and more. If it is a tangible business asset, there is likely a financing program for it.

*Response times may vary depending on deal complexity, documentation, and lender requirements.

Who This Is For

Whether you are an owner-operator buying your first truck, a small fleet adding capacity, or a large carrier expanding operations, we have financing programs designed for you. We work with local haulers, long-haul operators, and everyone in between.

What We Finance

Program Highlights

• All credit profiles from A+ to C
• No age restrictions on equipment
• Programs for startups with CDL experience
• Same-day decisions on many applications*
• Terms from 12 to 84 months
• Down payments starting at $0 for qualified buyers

Who This Is For

Construction companies, landscapers, aggregate haulers, excavation contractors, and any business that relies on dump trucks to get the job done. Whether you are buying your first dump truck or adding to your fleet, we have programs for you.

Types We Finance

Important: Dump Trucks Are Vocational

Dump trucks are classified as vocational equipment, not OTR (over-the-road). This is an important distinction because it means different lender programs apply. Vocational trucks are evaluated under construction equipment guidelines, which can offer different terms and rate structures than standard truck financing.

Program Highlights

• All credit profiles from A+ to C
• No age restrictions on equipment
• Construction-specific lender programs
• Same-day decisions on many applications*
• Terms from 12 to 84 months

Who This Is For

General contractors, site work companies, excavation specialists, builders, and any business that uses heavy equipment on the job. From a single skid steer to a full fleet of excavators, we have financing solutions for every size operation.

Equipment Types

Program Highlights

• All credit profiles from A+ to C
• No age restrictions on equipment
• 12-84 month terms
• Same-day decisions on many applications*
• Down payments starting at $0 for qualified buyers

Trailer Types We Finance

Program Highlights

• All credit profiles from A+ to C
• No age restrictions on trailers
• Can include tires in financing
• Same-day decisions on many applications*
• Terms from 12 to 84 months

Programs for New Businesses

Starting a trucking business is challenging enough without worrying about how to finance your first truck. We have programs specifically designed for new businesses with less than 2 years of operating history. Everyone starts somewhere, and we are here to help you get on the road.

What You Need

• CDL experience: A valid CDL with verifiable driving experience.
• Clean driving record: A safe driving history helps your application.
• Reasonable credit: We work with a range of credit profiles, but stronger credit helps with startup programs.
• Business formation documents: EIN, articles of incorporation or LLC formation, and operating authority if applicable.
• Equipment picked out: Know what truck you want to buy, the price, and the seller.

What to Expect

• Higher down payments may be required, typically 20-30%.
• Rates are higher for startups but decrease as you build business credit and operating history.
• Shorter terms may be recommended to build equity quickly.
• Some programs require a minimum amount of CDL experience (typically 1-2 years).

Building Your Business Credit

Your first equipment financing is an opportunity to build business credit. Making consistent, on-time payments establishes your business credit profile and positions you for better rates and terms on your next truck. Many of our clients start with one truck and grow into a fleet within a few years.

We Work With All Credit Profiles

At H.I.L. Financial, we believe that a credit score is just one part of your story. We work with all credit profiles from A+ to C, including credit scores as low as 575. We look at the full picture -- not just a number.

Programs for Credit Challenges

• Financing available for credit scores as low as 575
• Higher down payments may be required, typically 20-40%
• Collateral-based lending programs available where the equipment itself secures the financing
• Specialty lenders who focus on credit-challenged borrowers

What Helps Your Application

• Larger down payment: More money down reduces lender risk and improves your chances of approval.
• Time in business: Longer operating history shows stability, even with lower credit.
• Equipment equity: If you already own equipment free and clear, it can be used as additional collateral.
• Revenue: Strong business revenue demonstrates your ability to make payments.
• Explanation: If your credit issues are the result of a specific event (medical, divorce, pandemic), providing context helps lenders understand your situation.

Rebuilding Your Credit

Equipment financing can be a powerful tool for rebuilding your credit. Making consistent, on-time payments on your equipment loan builds positive payment history on your credit report. Over time, this can improve your score and open the door to better rates and terms on future financing.

We look at the full picture, not just a credit score.