At Excel Capital, many clients want to turn some of their equipment equity into cash. Lowering payments on existing financing is a priority for most clients.
If both goals are on your list, look at the cash you would receive and what you would owe afterward. A larger loan can release cash while also leaving you with a longer repayment commitment.
Equipment refinancing pays off an existing equipment loan with new financing. Cash-out financing may also provide money beyond the amount needed to close the old loan. Excel Capital helps businesses explore both options.
Before comparing offers, decide how much cash you need or what payment you’re trying to reach. Then get a written payoff quote. The statement balance alone doesn’t establish what it will cost to close the current loan.
Explore equipment refinancing options
Equipment refinance calculator
See what a new payment would look like and how much you would repay from today forward. You can also include extra cash borrowed against your equipment.
The starting numbers are an example, not an offer. Replace them with your payoff quote, payment schedule and proposed loan terms. For equipment you own outright, enter 0 in all four current-loan fields.
How this comparison is calculated
The new loan amount is your payoff plus extra cash, plus fees if you add them to the loan. The payment calculation assumes a fixed annual interest rate, equal payments at the end of each month and a new loan that is paid in full at the end of its term. At 0% interest, the loan amount is divided by the number of months.
The current-loan total is your actual monthly payment multiplied by the number left, plus any additional final payment. The new-loan total includes all new payments and any fees paid upfront. Previous payments are excluded from both. Totals are not discounted for the timing of payments, and use unrounded new payments, so the final payment schedule can differ by a few cents.
This is a loan comparison, not a lease or sale-leaseback model. It does not determine available equity, approval, an appraisal or your offered rate. Include all known charges; taxes, insurance and costs you leave out are not added automatically. Compare the results with the written offers before deciding.
Your refinance comparison
- Current monthly payment
- Estimated new monthly payment
- Monthly payment change
- New loan amount
- Fees paid upfront
- Cash left after upfront fees
- Remaining payments on current loan, including balloon
- New loan payments plus upfront fees
- Difference in total future payments
- Interest included in new loan payments
Buying another machine instead? Use the equipment loan calculator for a purchase and down-payment estimate.
What happens to the old equipment loan
The old debt is paid off, and you begin repaying the new financing. The equipment stays in use. What changes is the debt attached to it.
Start by identifying which of these situations applies to you:
| Your situation | Financing to explore | The number to establish first |
|---|---|---|
| You still owe money on the equipment | An equipment refinance loan to replace the existing debt | The written payoff amount |
| You owe money and want cash out | Cash-out equipment refinancing | Cash remaining after the payoff and fees |
| The purchase loan is paid off | A new loan secured by the equipment | The equipment’s assessed financing value and any other liens |
Paid-off equipment is a different starting point: there is no purchase loan to refinance. Borrowing against it creates new debt. Also check for liens connected to other business financing.
If you’re buying another machine, our equipment financing page covers new and used purchases.
Cash-out equipment refinancing
When you’re borrowing against equipment equity, ask for the amount that will actually reach the business. The new financing has to cover the existing payoff and any deducted fees first.
A cash-out example
Suppose the approved new loan is $100,000.
- Existing loan payoff
- -$60,000
- Fees deducted from proceeds
- -$3,000
- Net cash available
- $37,000
In this example, a business looking for $40,000 would still be $3,000 short. That gap matters even though the approved loan is much larger than the cash requirement.
For paid-off equipment, an equipment equity loan creates a new secured obligation. Check for other liens before assuming the equipment is available as collateral. The financing amount will also depend on its assessed value and the financing requirements.
Is that the same as a sale leaseback
No. With an equipment-secured loan, the business generally keeps ownership and grants a security interest. In a sale-leaseback, it sells the equipment and leases it back to continue using it. That changes the ownership arrangement, so read any end-of-term purchase provisions carefully. The OCC describes the structure in its lease financing guidance.
What a lower payment actually saves
A smaller monthly bill can be valuable, especially when cash flow is tight. But find out how the payment was reduced. If your current loan has three years left and the replacement runs for five, you’re adding two years of payments.
Consider this hypothetical comparison. A business owes $180,000 at 9.5% annual interest with 36 monthly payments remaining. It could refinance the same balance at 7%, paying $6,300 in fees upfront.
| Option | Monthly payment | Payments remaining | Future payments plus upfront fees |
|---|---|---|---|
| Keep the current loan | $5,765.93 | 36 | $207,573.51 |
| Refinance for 36 months | $5,557.88 | 36 | $206,383.59 |
| Refinance for 60 months | $3,564.22 | 60 | $220,152.94 |
The three-year refinance saves about $208 a month. After the upfront fees, the overall saving is about $1,190. That’s a fairly modest return for replacing the loan.
The five-year option cuts the monthly bill by about $2,202. That could make a real difference to a business’s budget, but it costs about $12,579 more overall than keeping the existing loan. The business would be paying for that monthly relief.
These are examples, not quoted offers. The calculations assume fixed annual rates and fully amortizing monthly payments, with no cash-out, balloon payment or additional payoff charges. Fees are paid upfront. Totals use unrounded payment calculations.
What belongs in your cost comparison
For your own loan, put the current payment schedule beside the proposed one. Include:
- The payoff quote: check its expiration date and any charges for closing the old loan.
- The new schedule: record the rate, payment frequency, number of payments and any balloon due at the end. Use the APR where it is provided.
- Fees: establish which are paid upfront, added to the loan or deducted from the cash you receive.
- Early payoff terms: find out what happens if you want to close the new financing ahead of schedule.
If a fee is financed and already included in the payments you’re adding up, don’t count it again as an upfront cost.
Our equipment loan calculator can help with standard monthly payment estimates. You’ll still need the payoff quote and actual fees to decide whether refinancing is worthwhile.
How to refinance an equipment loan
You can start with the loan paperwork and basic equipment details. An exact valuation isn’t something you need to invent before making an inquiry.
From the current loan to closing
Explain what needs to change
Give the reason for refinancing: the payment, total cost, a balloon payment or a need for cash.
Get the payoff in writing
Keep the current agreement and payment schedule with it.
Identify the equipment
Gather ownership records, serial numbers, photos and condition details.
Work through the proposed terms
Calculate the payments, fees and any net cash proceeds. Check the collateral requirements.
Confirm the closing details
If approved, establish how the old debt will be paid, how liens will be handled and when payments start.
When refinancing deserves a closer look
The payment example above leaves a practical choice. Is about $208 a month enough to solve the payment problem? If you need a bigger reduction, are the extra payments on a longer term acceptable? The answer depends on what the business needs from refinancing.
The benefit and the tradeoff
A payment that fits the budget
Less cash leaves the business each month.
Count the additional payments if the term is extended.
Less to repay overall
A lower rate could reduce the remaining borrowing cost.
Include the cost of closing the old financing and starting the new one.
A way to address a balloon payment
New financing may spread an approaching lump sum over time.
Establish whether another balloon payment remains.
Cash from equipment equity
Cash-out financing can provide funds while the equipment stays in use.
Deduct the old payoff and fees from the new loan amount.
There may be little to gain when the current loan is nearly finished. Substantial payoff charges can also undo the benefit of a better rate. And if the machine will need replacing soon, ask whether it makes sense to extend its debt for several more years.
Heavy equipment refinancing
For an excavator, loader, crane or production machine, the purchase invoice only tells part of the story. Its age, hours and condition matter to the financing review. Two machines bought for the same price can be in very different shape several years later.
When refinancing machinery, have the make, model, year and serial numbers ready. Maintenance records and current photos can help explain its condition; an inspection or appraisal may also be requested.
Think about your own plans for the asset as well. A machine you intend to keep for years calls for a different repayment decision from one you’re planning to replace. Its book value doesn’t necessarily tell you what financing it can support.
Paperwork to have ready
Collect the records for the equipment and the debt in one place:
- The current agreement, payment schedule and written payoff quote.
- An equipment list showing make, model, year and serial numbers or VINs.
- Titles, invoices or bills of sale, plus photos and condition information.
- Business bank statements, financial statements, tax returns and a schedule of business debt, as requested.
The business loan document checklist can help you organize the financial records. Our explanation of UCC filings covers liens to check alongside the loan agreement. Commercial Credit Group’s equipment refinancing guide also discusses ownership records and existing liens.
A few other equipment refinancing questions
Can older equipment qualify
It can be considered. Age is only part of the review; condition, value, usage and remaining useful life also matter. An older machine’s eligibility has to be assessed for the particular financing.
Can several equipment loans be combined
Some financing structures allow it. Put together the payoff quotes for all the loans, then compare the new obligation with the combined payments and costs you would otherwise face.
Does the new interest rate have to be lower
No. You might be refinancing to address a balloon payment or obtain cash-out funds. Be clear about that purpose, particularly if the new financing increases the total cost.
Talk through the loan and the equipment
When you contact Excel Capital about refinancing, tell us how much cash you want to take out, what payment you’re trying to reach, or whether you want to discuss both. Have the current payment, payoff quote and equipment details ready so we can talk through the request.
Explore equipment refinancing options
