What actually sets your rate.

Equipment finance is secured lending, which means the pricing question is really two questions: can you pay, and what is the machine worth if you cannot. Everything below is one of those two.

1. Time in business

The single heaviest factor for most lenders. Under two years is a different market with different pricing and often a required personal guarantee. Past five years with clean payment history, you are in the mainstream.

2. Credit profile — business and personal

On lower-middle-market deals the owner's personal credit is usually pulled regardless of entity structure. Payment history on prior equipment paper carries particular weight, because it is the most direct evidence available.

3. New versus used, and the age of the machine

New equipment prices better. Used equipment prices to its remaining life and its resale market. On trucks, mileage and engine hours matter more than model year. Lenders often have a hard age cap — past it, the answer is no at any rate.

4. Resale market for that specific asset

A late-model sleeper tractor has a deep, liquid national resale market. A purpose-built or heavily customized machine does not. The thinner the resale market, the more the lender is lending on you rather than on the iron, and the higher the rate.

5. Down payment

More money down means a lower loan-to-value, which lowers the lender's exposure and your rate. It is usually the most effective single lever you control.

6. Term length

Longer terms carry more risk to the lender because the asset depreciates faster than the balance amortizes in the early years. They often price slightly higher, and they always cost more in total. The right term is the one that matches how long the machine earns, not the one that produces the payment you want to hear.

7. Structure

A $1 buyout lease, a fair market value lease, a straight equipment loan and a term loan secured by a blanket lien all price differently and carry different tax and balance-sheet treatment. See lease versus loan.

8. Industry

Long-haul trucking, construction and oil & gas services each carry their own loss history with equipment lenders, and that history is in your rate before you say a word. It is not personal and you cannot argue it away — but knowing it tells you which lenders to approach.

What to do with all of this

• Get one independent quote every time, even when you intend to take the dealer's offer.
• Convert every quote to an APR before comparing. A payment is not a price.
• Ask whether fees are financed or paid up front, and pay them up front where you can.
• Ask about prepayment penalties before you sign, not when you want to refinance.
• Match the term to the earning life of the machine, not to the payment you want.
• Check whether the lender is taking a lien on the specific asset or a blanket lien on everything — a blanket lien will collide with your working capital line.