How much down payment is required for equipment financing?

Many equipment financing approvals require zero down payment — the equipment itself serves as primary collateral. Down payments of 10–20% are common for newer businesses (under 24 months), weaker credit (sub-650 FICO), or specialized equipment with thin secondary markets.

Three factors drive the down payment

Three factors drive the down payment requirement:

Borrower credit — 700+ FICO with 24+ months in business often funds at $0 down. Sub-650 FICO typically requires 10–20% down.
Equipment type — well-traded equipment with deep secondary markets (Class 8 trucks, common construction machinery, mainstream restaurant equipment) often funds at $0 down. Specialized or rapidly-depreciating equipment requires more skin in the game.
Equipment age — new and lightly-used (under 5 years) tends to fund at lower down payments than older equipment.

Down payment moves the rate too

Working math: a $100,000 piece of equipment with a strong file might fund at $0 down, $1,800/month over 60 months at ~12% APR. The same equipment with a weaker file might require $10,000 down ($90,000 financed), at $1,950/month at ~17% APR. The down payment isn't just an entry cost — it usually moves the rate too.

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Worked example — $0 down vs. 15% down on the same machine

A $100,000 piece of well-traded construction equipment, 60-month financing. Strong file (720 FICO, 4 years operating): $0 down, ~12% APR → ~$2,225/month, total cost ~$133,500. Weaker file (615 FICO, 18 months operating): 15% down ($15,000), ~17% APR on the $85,000 balance → ~$2,110/month, total cost ~$141,600 including down payment. Down payment shifts upfront cash and rate; total cost moves a few thousand either way.

Don't let '$0 down' disguise a high rate

Some lenders advertise $0 down on equipment but back-load the rate. Always ask for total cost of capital and effective APR before signing — a $5k down payment at a 4-point lower APR can save more over the term than the upfront discount.

Key takeaways

Many equipment financing approvals fund at $0 down — the equipment itself is collateral.
Strong files (700+ FICO, 24+ months in business) tend to fund at $0 down on well-traded equipment.
Down payments of 10–20% are common for newer businesses, weaker credit, or specialized equipment.
The down payment usually moves the rate too — paying more upfront can lower APR.
Educational ranges only — actual approvability depends on lender, file, and current market.
Related: Business Equipment Loans Explained | FICO 650–699 equipment financing options | Construction business loan options

Tax + program references

IRS Section 179 (Publication 946) lets businesses deduct the full purchase price of qualifying equipment purchased or financed during the tax year, up to a 2026 limit of $2,560,000. — IRS Publication 946
UCC Article 9 governs lender security interest filings (UCC-1) on financed equipment — making the equipment the lender's collateral and the legal basis for $0-down deals. — Cornell Law UCC §9-502