Tools for
Owner/Operators
&
Trucking Fleets
Equipment lessors rarely quote an interest rate. They quote a monthly payment and a term, because a payment sounds manageable and a rate invites comparison. But every lease has an implied interest rate baked into it, and once you know the purchase price, the down payment, the monthly payment, the number of months and the end-of-term buyout, that rate can be calculated exactly.
That number is your APR — the annualised cost of the money you borrowed, expressed the same way a bank, a credit union or a credit card would express it. It is the only figure that lets you put a lease, a term loan and a line of credit side by side and see which one is genuinely cheaper.
This calculator solves for the rate that makes the present value of all your payments (including the buyout at the end) equal the amount you actually financed. Enter your figures without sales tax so the rate reflects the financing itself rather than the tax you would pay either way.
You need five inputs: the equipment price before tax, your down payment, the monthly payment, the number of months in the term, and the end-of-term buyout amount. The amount financed is the price minus the down payment. The APR is the rate at which that financed amount, grown at interest, is exactly repaid by your stream of monthly payments plus the buyout. Doing it by hand requires iteration, which is what this calculator does for you.
A $1 buyout (sometimes $10, or a nominal amount up to a few hundred dollars) means you own the equipment outright at the end of the term for a token payment. Economically it behaves like a loan rather than a rental, which is why it belongs in an APR calculation. If your buyout is a large figure — several thousand dollars, or a percentage of the original price — you are likely looking at a fair market value or lease-to-own structure, and the APR shown here will understate what you would pay to actually keep the truck.
No. A lease rate factor is the monthly payment expressed as a percentage of the equipment cost, and a money factor is a decimal convention borrowed from auto leasing. Neither accounts for your down payment, the timing of your payments or the buyout, so neither is comparable to a bank APR. Converting to APR is the only apples-to-apples way to compare.
Common reasons: a large down payment or first-and-last payment collected up front reduces what you actually borrowed while your payments stay the same; documentation, origination or filing fees rolled into the payment; payments due at the beginning of each period rather than the end; or a buyout larger than a nominal amount. Any of these pushes the effective rate above the headline number.
No. Enter the price, down payment and monthly payment excluding sales tax. Tax is payable regardless of how you finance the equipment, so including it distorts the interest rate rather than clarifying it.
It depends heavily on your credit profile, time in business, the age and type of the equipment, and the rate environment at the time you sign. Rather than aiming at a benchmark, calculate the APR on every offer you receive, then compare those offers against each other and against a bank or credit union term loan for the same equipment. The spread between the best and worst offer is usually larger than most operators expect.