Lease vs. finance for equipment in Canada
If you’re buying equipment for your business, you’ll usually see two broad paths: financing (designed for ownership) or leasing (designed for flexibility). Both can be smart—depending on the asset, your cash flow, and your goals.
What “equipment financing” usually means
Equipment financing is structured so your business pays down the equipment over time and ends with ownership (often for $1 or a nominal amount). In practice, this can be set up as a loan or a conditional sales contract—details vary by lender and province.
Financing tends to fit when:
- The equipment has a long useful life and you plan to keep it.
- You want the clearest ownership path at the end of the term.
- You’re building equity in the asset (for future trade, refinance, or sale).
What “equipment leasing” usually means
Leasing is a way to use the equipment while making structured payments, often with end‑of‑term options. Some leases are built to mimic ownership, while others keep flexibility higher. The right structure depends on what you want at the end of the term.
Leasing tends to fit when:
- You prefer predictable payments and flexible end options.
- You upgrade equipment more often or expect technology/asset changes.
- You want to keep more room for cash flow planning (especially for fleets or multiple assets).
How to choose: a simple decision shortcut
- “I want to own it” → financing is usually the cleanest fit.
- “I want flexibility / upgrade options” → leasing is often the better starting point.
- “I need the lowest total cost” → depends on the deal, asset, and term—compare offers apples‑to‑apples.
- “I need approval to move fast” → the speed is often about documentation and deal details, not the label (lease vs finance).
What lenders will ask for (either way)
- Equipment details: make/model/year, condition, and where you’re buying it.
- Price and seller type: dealer vs private vs auction.
- Business basics: time in business, where you operate, and high‑level cash flow context.
Want us to recommend the best structure?
Send the basics and we’ll suggest a realistic path—lease, finance, or an alternative structure if it fits better.
FAQ
Common questions when deciding between a lease and financing.
Is a lease always cheaper than financing?
Not always. The “cheapest” option depends on the structure, term, asset, and what happens at the end of the term. Compare total cost and end‑of‑term value.
Can I lease used equipment?
Often, yes. Used equipment is common in equipment finance—eligibility depends on age, condition, and lender guidelines.
What’s the difference between a $1 buyout and a residual?
A $1 buyout is designed for ownership at the end. A residual means there’s an end‑of‑term option or value remaining, which can change payments and flexibility.
Do I need a down payment?
Sometimes. It depends on time in business, credit profile, asset type, and lender requirements. We’ll explain options clearly.
How fast can I get approved?
For straightforward deals with complete details, decisions can often be returned quickly—sometimes within 24 hours. Timelines vary by lender and documentation.