How equipment finance interest works
Interest is worked out each month on the balance you still owe, at one twelfth of the annual rate. Early payments are mostly interest; as the balance falls, more of each payment repays the loan.
Lenders may calculate interest differently (some charge it daily), so your actual interest can differ slightly.
Worked example
Financing £54,000 for a £60,000 machine at 9% over 48 months costs £10,502.03 in interest. Over 36 months it would cost £7,818.68.
Choosing a term
Matching the finance term to the machine's useful life avoids paying for equipment you no longer use, and a shorter term saves interest.
Inputs for the machinery loan interest rate calculator
Machine price
The price of the machinery or equipment.
Deposit
What you're paying upfront. Borrowing less means paying less interest.
Interest rate (per year)
The annual interest rate on your finance. The rate shown is only an example, so enter the rate from your quote.
Term
How many months you'll repay over. A longer term means paying interest for longer.
CALCULATOR QUESTIONS
Machinery loan interest rate calculator questions
How much interest is on machinery finance?
Enter your figures above. For example, £54,000 at 9% over 48 months costs £10,502.03.
Does a shorter term save interest?
Yes. In the example, 36 months instead of 48 saves £2,683.35.
Why do I pay more interest at the start?
Interest is charged on the balance you owe, which is highest at the start. As you repay, it falls and so does the interest.
Is the interest tax deductible?
For business use it's generally allowable. Check with your accountant.