# Advance Rate

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Last modified: 2026-05-29T19:39:17+00:00
Type: efin_glossary

## Summary

Percentage of equipment value a lender will finance. 100% = no down payment.

## Content

Advance rate is the percentage of an asset's value that the lender will finance. The remainder is the borrower's down payment or equity. Loan-to-value (LTV) is the inverse way of expressing the same thing.
Typical advance rates by equipment type

New equipment, excellent credit: 100% (zero down)
New equipment, prime credit: 90-100%
Used equipment, prime credit: 80-90%
Sub-prime credit, new equipment: 70-85%
Sub-prime credit, used equipment: 65-80%
Specialty/custom equipment: 60-80% regardless of credit

What lenders include in "value"

Equipment purchase price (always)
Sales tax (often, financed)
Delivery and freight (often included)
Installation and setup (often, up to 25% of equipment cost)
Training (sometimes, on larger transactions)
Software and tooling that ships with equipment (sometimes)

"Soft costs" cap: most lenders limit financed soft costs to 15-25% of equipment cost. Above that, soft costs need separate financing or cash payment.
Why advance rate varies

Credit risk: stronger credit = higher advance rate
Asset class: well-known assets with strong resale markets get higher advance rates
Equipment age: new gets higher; older used gets lower
Loan term: longer terms sometimes require lower advance rate to keep the lender exposed less per month
Lender risk appetite: portfolio vs securitized lenders have different tolerance

How to increase your advance rate

Improve credit profile before applying
Choose equipment categories with strong resale markets (trucks, construction, manufacturing)
Buy newer equipment
Provide cross-collateral (other equipment, real estate)
Show strong business financials (revenue, cash flow)
Time-in-business of 5+ years