At Soluco, we’re ready to answer Canadian business owners’ top questions about how to access the best equipment lease rates in the country. Browse up-to-date information about lease rates below, or give us a call to speak with a finance broker directly.
Key takeaways
- Average Rates: A good equipment lease rate for businesses with solid credit typically falls between 7% and 9% for leases under $100,000. For businesses with excellent credit, rates can be as low as 5%.
- Influencing Factors: Many variables impact your rate, including the type and condition of the equipment, the length of your lease term, your credit profile, and the age and financial health of your company.
- Negotiability: Lease rates are generally negotiable. You can increase your chances of getting a better rate by improving your credit score, preparing a strong business file, and considering different lease terms.
- Leasing vs. Loans: Equipment lease rates can be higher than loan interest rates because leasing often includes additional services and benefits, such as easier equipment upgrades and more flexible terms.
- Key Advantages: The main benefits of leasing include low upfront costs, flexible payment terms, 100% tax-deductible payments, fast approvals, and the ability to easily upgrade equipment.
- Fixed Rates: Equipment leases are a form of fixed-rate financing. Your payment and rate will not change over the course of the lease, which provides stable and predictable budgeting.
1. What is a good equipment lease rate in Canada?
A good equipment lease rate in Canada typically falls within the range of 7% to 9% for businesses with satisfactory credit. This range applies to leases under $100,000. However, the definition of a “good” rate can vary.
For less competitive lessors or those with credit issues, rates between 9% and 13% are common. For businesses with a good credit score, competitive leasing companies can offer rates as low as 5% (depending on the value of the equipment).
Keep in mind that there are many factors affecting lease rates and the best way to get a precise answer is to contact one or more equipment lease financing companies and compare the rates offered to you.
2. What factors influence equipment lease rates?
There are quite a few factors affecting lease rates. These include, but are not limited to:
- Equipment type and condition: Highly specialized or newer equipment typically commands higher rates due to its increased value and functionality. However, high-value equipment that retains its worth over time may also come with more favorable terms. Well-maintained machinery generally attracts lower lease rates than older or heavily used equipment, as the latter may entail higher maintenance costs and depreciate faster.
- Lease term length: Longer lease terms could result in lower monthly payments, but may result in higher total costs over the lease’s lifetime.
- Your credit profile: Both personal and business credit scores could be taken into account.
- Financial health of your business: Lenders will evaluate your company’s financial statements, including revenue, profit margins, and cash flow. Strong financial health can result in more favorable lease terms and rates.
- Age of your company: Startups and businesses under two years old are often considered riskier, which can lead to higher interest rates. Established companies may receive more favorable terms.
- Current market conditions: National interest rates and the overall state of the economy influence equipment lease rates. During periods of economic growth, rates may increase.
- Type of lease: The structure of the lease, such as the number of payments in advance or the presence of a residual value, can affect the effective interest rate.
3. Can I negotiate a better rate?
Leasing rates are generally negotiable in Canada. To increase your chances of obtaining a better rate, here are a few effective strategies:
- Improve your credit file before you apply
- Consider different lease term options and payment structures
- Prepare a solid business file that highlights your financial stability.
- Work with a professional equipment leasing broker
4. How do I find the best rate for my business?
When you approach a bank or other financial institution for a lease, they will offer you the rates approved by that institution. If you approach an independent equipment financing body you could benefit from more flexible terms and potentially be offered a rate that better fits your unique business situation.
If you have poor credit, or are a young start-up, you could be offered better rates by a financier that specializes in offering leases to this type of business. It is always a good idea to shop around for the best offer for your specific business profile and equipment needs.
5. Are equipment lease rates better than loan interest rates?
Equipment leasing rates can be higher than loan interest rates. This is because leasing includes additional services and benefits, such as easier equipment upgrades.
However, the additional benefits of leasing could make it a better choice for many companies, especially start-ups and new businesses.
6. What are the advantages of equipment leasing?
Key advantages of leasing equipment such as tractors, forestry equipment, trucks and other heavy equipment include:
- Low upfront costs
- Flexible payment terms
- 100% tax-deductible payments
- Fast approvals with minimal paperwork
- Greater purchasing power
- Easy upgrades and replacements.
May of these advantages also apply to leasing other types of excavating equipment, transport equipment, construction equipment and trailers.
7. Can I lease used or second-hand equipment?
Yes, leasing can be arranged for almost any type of business equipment, including used machinery. However, there may be eligibility restrictions, depending on the age of the proposed piece of equipment.
8. Will my rate change over the course of the lease?
No. Leases are a type of fixed-rate financing. This means that your payment and rate stay the same throughout the duration of your equipment lease.
Unlike variable-rate loans, your equipment lease rate is not influenced by fluctuations in index rates or market conditions, which means you can budget for a lease knowing that you will be making predictable monthly payments for the entire lease term.
Soluco provides fast, flexible commercial financing to Canadian businesses
Equipment leasing is a good option for various types of Canadian businesses. Get answers to all your questions from the team of finance brokers at Soluco.
Our mission is to help your business grow by providing tailored financing solutions as quickly and efficiently as possible. We’ll approve your lease application within 24-48 business hours, so you can get the equipment you need to make your business thrive.