What to write down before comparing two equipment loans

Two equipment quotes can describe the same machine and still be difficult to compare. One emphasizes a lower payment. Another shows a shorter term. Fees may be written somewhere else entirely.

Put the terms on one page before deciding what the monthly number means. The Equipment & Loan Payment Calculator gives you a consistent arithmetic model. The lender's actual disclosures and agreement remain the source for the offer itself.

Separate the purchase from the financing

Record the equipment price, any deposit, the amount financed, the stated interest rate, the payment term, and fees. Add a place for a balloon payment, insurance requirements, and early-payment terms if they apply.

Do not assume every percentage on the quote means the same thing. The Consumer Financial Protection Bureau explains that an interest rate describes borrowing cost, while APR also reflects additional loan fees. This distinction helps you ask better questions; the calculator does not replace a lender's calculation. CFPB: interest rate and APR

Try a simplified illustrative loan

Use these fictional inputs, with no financed fees or balloon payment:

• Amount financed: $12,000.
• Interest rate: 12% annually.
• Term in years: 1.
• What it earns you a month: $1,500, an assumption for the example.

The model uses a monthly rate of 1% and twelve payments. Its payment formula is principal × monthly rate ÷ [1 − (1 + monthly rate) raised to the negative payment count]. With these inputs, the payment is approximately $1,066.19.

The monthly schedule rounds interest and payments to cents, then adjusts the final payment to clear the balance. It totals roughly $12,794 in payments and $794 in interest. The exported rows show the precise cents. At a zero interest rate, the simplified payment would instead be principal divided by the number of payments.

Do not call revenue minus a payment profit

The example's $1,500 earnings input minus the modeled payment leaves about $433.81. If the $1,500 is revenue, that remainder still has to cover operating expenses. Fuel, maintenance, operator time, insurance, and downtime can change the decision substantially.

The tool also divides $12,000 by $1,500 to show eight months in its simplified payback comparison. That does not mean the loan ends in eight months or the business recovers its full investment by then. It ignores interest and operating costs in that comparison.

Treat these outputs as prompts for a fuller worksheet. If you cannot explain where the earnings assumption came from, label it unverified and test a lower-utilization scenario.

Compare the same equipment under both offers

Use the first quote's terms, save the result, and then enter the second quote's terms. Keep the equipment and operating assumptions constant while comparing financing. Otherwise, a change in expected work can disguise a more expensive loan.

Copy this table into a document:

EQUIPMENT QUOTE COMPARISON
Equipment and intended job:
Purchase price / deposit / amount financed:
Stated interest rate / APR, if supplied:
Term / payment frequency / monthly payment:
Fees paid now / fees financed:
Balloon or final payment:
Total payments shown by lender:
Insurance and maintenance requirements:
Early-payment terms:
Estimated monthly revenue and its evidence:
Operating costs omitted from the calculator:
Questions still needing a lender's answer:

Do not invent missing terms to finish the comparison. A blank cell marked “ask lender” is more useful than a confident-looking assumption nobody can verify.

Test the month when work is slower

A machine may earn unevenly while payments remain due on schedule. Look at the cash available during a slower month, not just an annual average. Consider whether the team can operate the equipment and whether the expected jobs already exist or are merely hoped for.

Run the Equipment & Loan Payment Calculator as a comparison aid. Keep the saved result next to the actual quotes, and review the full costs before committing.