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Founder & Editor · Expertise: Equipment financing, Lender matching, Loan and lease structure
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Sources: partner-lender program data + industry research Editorial standards: methodology Disclosures: advertising + lender relationships

No Money Down Equipment Financing

No Money Down Equipment Financing. Comprehensive guide.

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No-money-down equipment financing is available for excellent-credit borrowers on new equipment. For sub-prime credit, used equipment, or first-time buyers, expect to put 10-30% down. The “zero down” claim is real for some buyers; aspirational for others.

Who qualifies for zero down

  • FICO 720+ (excellent credit)
  • 2+ years in business
  • Strong revenue (10x+ monthly equipment payment in deposits)
  • New equipment from major OEM (Caterpillar, John Deere, Volvo, Kenworth, etc.)
  • Equipment with strong resale market
  • Established relationship with the lender or dealer

Who doesn’t qualify for zero down

  • Sub-prime credit (under 650 FICO)
  • Newer business (under 2 years)
  • Used equipment (especially older or private-party)
  • First-time business owners
  • Specialty equipment with thin resale markets
  • Industries with restricted lender appetite

What “no money down” actually means

Zero down doesn’t mean zero cash at closing. Expect to pay:

  • First payment in advance (sometimes 2 months upfront)
  • Doc fee ($150-500)
  • Insurance binder premium
  • Sales tax at delivery (in most states; some allow tax to be financed)
  • UCC filing fee (small)

Total cash-at-closing for “zero down” can still be $1,500-5,000 depending on the deal.

Trade-offs of zero down

  • Higher monthly payment. 100% financed = more principal to amortize.
  • Slightly higher rate. Some lenders price 100% LTV at 0.25-0.5 points above 90% LTV.
  • Underwater risk. Equipment depreciates faster than principal amortizes; you may owe more than the equipment is worth for the first 12-24 months.
  • Refinance limitation. Hard to refi during the underwater period.

When zero down makes sense

  • You have other higher-yield uses for the down-payment cash (paying off high-interest debt, working capital for inventory, etc.)
  • The equipment will generate enough revenue to cover the higher monthly payment
  • You qualify for the best rate tier (so the small rate premium is minimal)
  • You plan to keep the equipment long-term (so the underwater period passes)

When down payment is worth it

  • You want lower monthly payment for cash-flow predictability
  • You want lower total interest paid
  • You want flexibility to refinance early
  • You’re unsure about the equipment fit and want a smaller commitment

Sub-prime “no down” scams to watch for

Some sub-prime lenders advertise “no money down” but bake the missing down payment into the equipment price:

  • Equipment list price inflated by 10-20%
  • Lender finances the inflated price
  • You appear to put zero down but actually paid the down payment as embedded markup

Always confirm the cash price independently. Get a written cash-price quote and a separate written financed-price quote; if they differ materially, that’s the markup.

The middle ground

For most borrowers, putting some down is the right answer:

  • 5-10% down: typical for prime credit on new equipment. Modest cash, escapes underwater quickly.
  • 15-20% down: typical for fair credit or used equipment. Stronger lender approval, better rate.
  • 25%+ down: typical for sub-prime, startup, or specialty equipment. Almost always required.

Apply for soft-pull pre-qualification at /apply/.

Last reviewed: May 28, 2026. Not tax or legal advice.

E
Editorial review by Ed Stapleton Jr. · Founder & Editor

How lenders look at this and what to watch for

How lenders look at this

The lender perspective on the topic above weighs four primary factors. Knowing how they map to your specific situation helps frame the rest of the process.

  • Industry sector. Some industries get standard pricing, some get a premium, some get a discount. Long-term stable sectors with low default rates (utility infrastructure, established medical, government contractors) typically price favorably.
  • Time in business. The single most weighted factor for most equipment lenders. Two years in business opens up the full program menu. Under one year narrows the lender pool and often requires larger down payment.
  • Personal credit of principals. For owners with 20 percent or more equity, personal FICO drives both the available program and the rate. The pull is soft at prequalification, hard at formal application with the chosen lender.
  • Geographic operating territory. Where the equipment will operate matters. Some lenders prefer single-state operation; others price interstate or cross-border use differently. The lender match changes if the equipment will operate outside the home state regularly.

Common pitfalls

The patterns below show up repeatedly on financing transactions. Catching any of these at the application or document-review stage saves real money later.

Co-borrower vs guarantor distinction

Some lenders require a co-borrower on the loan rather than a guarantor. The legal and tax implications differ materially. A co-borrower has direct payment obligation; a guarantor only steps in if the primary defaults. Make sure your funding documents reflect the role you intended to play, especially if multiple owners are involved.

UCC blanket lien

A standard equipment loan creates a UCC-1 filing against the specific equipment. Some lenders file a blanket UCC against all business assets, which limits your ability to add other financing later without subordination agreements. Read the security agreement before signing.

Trade-in payoff timing

If your transaction includes a trade-in with an existing lien, the new lender pays off the trade-in lien as part of the funding. Verify the trade-in payoff amount the new lender uses matches the actual payoff from the prior lender (which can include accrued interest and fees through the funding date). A $500 to $2,000 gap is common if this is not reconciled.

Doc fee surprises

Lender documentation fees range from $150 on the low end to $1,500 or more on larger transactions. These are disclosed in the funding documents but easy to skim past. Ask up front what the doc fee is, and whether it is being added to the financed amount or paid out of pocket at funding.

Pre-signing due diligence

The pre-signing window is when negotiation room exists. After signing, the buyer owns the discrepancy between what was discussed and what is documented. The items below cover the highest-leverage checks.

  • Comparable sales data. Pricing checked against recent comparable sales from auction sites, dealer listings, and trade publications. A unit priced 15 percent above market signals either a premium configuration or a seller hoping the buyer does not check.
  • Inspection by independent third party. For used equipment over $50,000, an independent mechanical inspection runs $300 to $800 and surfaces issues a walk-around will not catch. Lenders often require this for used equipment above a threshold.
  • Manufacturer warranty status. On used equipment, confirm what is left of the original manufacturer warranty. Some warranties transfer with title and continue; others are tied to the original owner. The remaining warranty has dollar value and should factor into the purchase price.
  • Hour or mileage reading verified. Photographed at signing, recorded in writing on the bill of sale, and matched to the seller representation. Hours and miles are the single biggest driver of asset value at term-end.
  • Wear items documented. Tires, tracks, undercarriage, cutting edges, brakes. Photograph and note remaining life. These are the items that will need replacement first and that buyers under-budget for.

Frequently asked questions

Can I see all the offers, or only the one you recommend?
You see the offer or offers from the lender or lenders we route your application to. We route to the lender or lenders we believe match your profile best. If you want to compare against an offer you have independently, share it with us and we can route to a different lender for an alternative quote.
What happens to the loan if the equipment is destroyed?
Insurance proceeds go to the lender first to pay off the remaining loan balance. Anything above the payoff goes to you. If the insurance does not cover the full payoff (deductible, depreciation in policy terms), you owe the gap. GAP coverage is available for an additional premium on most equipment classes.
What happens if the equipment needs warranty repair during the loan term?
The loan and the warranty are independent. You continue making loan payments while the equipment is in warranty repair. Service contracts and extended warranties can be financed into the loan if you choose, with the cost rolled into the principal.
Are the rates fixed for the loan term?
Most equipment loans and leases are fixed rate for the full term. Variable-rate equipment financing exists for certain larger transactions but is uncommon under $500,000.
Will the lender finance equipment we are buying from a private seller?
Yes, most of our partner lenders finance private-party transactions. The documentation looks slightly different from dealer transactions: bill of sale from the seller, lien-release if there is a prior loan, title work direct from the state. Expect 3 to 5 additional business days on the funding timeline.
What if the equipment will be cross-border or international?
Equipment that crosses an international border in the course of business (cross-border trucks, certain aviation) is financeable but requires the lender to confirm coverage in the equipment use. Cross-border use can also affect insurance, registration, and apportioned licensing.

Quick answers

Direct answers to the questions we hear most on no money down equipment financing applications. Each answer is one we have given to a real buyer in the last quarter.

How does Section 179 work?
Section 179 lets you deduct up to $1.16 million (2024 limit, indexed annually) of qualifying equipment in the year placed in service, rather than depreciating over 5 to 7 years. Equipment must be placed in service before December 31 of the tax year, used more than 50 percent for business, and financed through a qualifying structure (loan or EFA, not operating lease).
How fast can I get funded?
Standard equipment loans on app-only programs (under $150K typically) close in 24 to 72 hours from doc submission. Full-financials programs run 3 to 7 business days. Titled equipment with title transfer adds 1 to 4 weeks.
Can I finance equipment from a private seller?
Yes, though private-party transactions add documentation requirements. The lender needs proof of clear title transfer, often through a third-party title services provider or escrow. The bill of sale needs to be clean and complete. Some lenders prefer dealer purchases due to documentation simplicity.
What is an EFA loan?
An Equipment Finance Agreement (EFA) is a structured equipment loan with a $1 buyout at the end of term. Functionally identical to a loan for tax purposes (you depreciate and own the equipment), but documented as a finance agreement. Most common structure for buyers planning to keep equipment past the financing term.
Does a soft-pull pre-qualification affect my credit score?
No. A soft pull does not affect your credit score. The hard pull happens at final underwriting if you accept the lender match. That is the only inquiry that posts to bureaus.
What is a balloon payment?
A balloon payment is a large final payment at the end of a loan term that is not fully amortized through monthly payments. Common on shorter terms with longer-life equipment. Borrowers either refinance the balloon at end of term, pay it cash, or include it in budgeting from day one. Most equipment loans amortize fully without balloons.

Cost stack: what total ownership actually includes

The equipment purchase price is one line on the financed amount. The actual cost of ownership over the life of a no money down equipment financing deal includes the items below. Buyers who only budget for the purchase price often hit cash-flow surprise within the first 12 months.

  • Late payment fees and penalties. Late fees of 5 to 10 percent of payment if more than 10 days late. Default interest of 4 to 6 points may apply. Worth knowing before signing.
  • Tooling and accessories. Cutting tools, attachments, fixtures, and accessories specific to the equipment. Often quoted separately from base equipment. Can run 10 to 40 percent of equipment cost.
  • Storage and security infrastructure. Indoor storage, security systems, and theft-prevention measures. Particularly important for landscape, construction, and small equipment frequently stored outdoors and at job sites.
  • Insurance premiums. Commercial equipment insurance with lender named as loss payee. Annual premiums run 1 to 5 percent of equipment value depending on coverage and equipment category.
  • Equipment purchase price. Base equipment price as quoted by the dealer. Negotiable, especially on used equipment and end-of-quarter new equipment.
  • UCC-1 filing fees. $5 to $84 depending on state. Paid at filing; some lenders absorb, some pass to borrower.
  • Operator training. Manufacturer-provided or third-party operator training. Runs $1,500 to $25,000 depending on equipment complexity. OSHA-compliant training required on many categories.
  • Personal property tax (where applicable). Annual personal property tax assessed by counties in many states. Runs 0.5 to 3 percent of assessed value annually.

What if something changes mid-term

Equipment loans run for 36 to 96 months. Things change. The patterns below cover the situations that come up most often during the loan term and how they typically resolve.

Pre-payment penalty obstacles to refinancing

Calculate the breakeven: penalty cost vs. interest savings on refinanced rate. Common breakeven is 12-18 months. If you expect to keep the equipment 24+ more months at lower rate, the penalty usually pays back.

Business ownership change during loan term

Most equipment loans are personally guaranteed and assumable with lender consent during ownership change. The new owner submits an application similar to the original; the lender reviews and either consents or requires payoff.

Personal guarantee called on default

Personal guarantee makes the principal personally liable for the debt if the business defaults. Working with the lender on workout or restructure is the preferable path. Personal bankruptcy is a real consequence of unresolved default with personal guarantee.

Equipment serial number does not match UCC filing

Identify the error (dealer substitution, lender filing error, etc.) and resolve before subsequent financing. The UCC needs to match the actual collateral for enforceability. Lender amendment of the UCC handles this in most cases.

Authoritative sources

The rate ranges, structures, and program details on this page are informed by our partner-lender book and the public industry resources below. We link out so you can verify any specific claim or go deeper.

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Reviewed by

Ed Stapleton Jr.

Founder & Editor

Ed Stapleton Jr. runs Fund My Equipment. Every page on this site is written and reviewed by Ed.

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