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Equipment loan or equipment lease: how the structures differ
A plain-English comparison of ownership, end-of-term outcomes and balance-sheet treatment so you can ask better questions before you commit.
An equipment loan finances a purchase you own from day one. The asset is normally the collateral, and once the balance is repaid the equipment is yours free of the lien.
A lease is a right to use the equipment for a term. Some leases end with a purchase option, some end with a return, and the accounting treatment depends on the structure and your accountant's determination.
The right choice depends on how long you will keep the asset, how quickly it becomes obsolete, and how your business treats depreciation. Talk to your accountant about your specific situation before choosing a structure.