Equipment Loan Calculator

Free tools for sizing up an equipment purchase. Estimate monthly payments at a quoted simple-interest rate, reverse-calculate the rate from a quoted payment, and project Section 179 first-year tax savings on a qualifying equipment purchase.

Loan calculator

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What is simple interest?

With simple interest, the interest charge each year is a flat percentage of the original loan amount. It does not compound. Interest is never charged on previously accrued interest.

Total interest = Loan amount × Annual rate × Years

So an $8,000-per-year interest charge on a $100,000 loan is an 8% simple-interest rate, regardless of whether the term is one year or seven. That is why this method is common on equipment loans, vendor financing, and many commercial term loans: it is straightforward to quote, easy to verify, and the borrower can see the full cost of the loan up front.

Section 179 savings

Tax savings calculator

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Auto-fills from the loan calculator above.

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Default 21% (C-corp). Pass-through entities should use the owner's marginal rate.

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Section 179 & equipment financing

Section 179 of the U.S. tax code lets a business deduct the full purchase price of qualifying equipment in the year it is placed in service, instead of writing it off slowly through depreciation. Crucially, you can take the deduction even when the equipment is financed. You do not have to pay cash up front to claim it.

That combination, financing the equipment with a simple-interest loan and deducting the full cost the same year, is one of the main reasons businesses time equipment purchases around year-end.

Commonly qualifying purchases:

  • Heavy machinery, manufacturing, construction, and farm equipment
  • Trucks, vans, and certain business-use vehicles (separate caps apply)
  • Computers, printers, and off-the-shelf software
  • Office furniture, fixtures, and tenant improvements to non-residential property

Things to know before you count on it:

  • Equipment must be used for business more than 50% of the time.
  • Equipment must be placed in service during the tax year, not just ordered or paid for.
  • There are annual deduction caps and a phase-out threshold that change year to year.
  • Section 179 can stack with bonus depreciation in many cases.
  • The deduction cannot exceed the business's taxable income for the year (any excess carries forward).
Not tax advice. Annual limits, qualifying property, and bonus-depreciation rules change. Confirm your specific situation with a CPA or tax professional before relying on Section 179 in a purchase decision.

Frequently asked questions

What is simple interest?

Simple interest is interest charged only on the original loan amount. It does not compound. Total interest equals loan amount times annual rate times years.

If you borrow $100,000 at 8% simple interest, you pay $8,000 per year in interest, every year, for the life of the loan.

How is simple interest different from an amortized loan?

On an amortized loan such as a mortgage or car loan, each payment is split into principal and interest, and the interest portion is calculated on the remaining balance. As you pay down principal, the interest portion shrinks.

On a simple-interest equipment loan, total interest is calculated up front and divided evenly across payments. The math is simpler, the total cost is obvious from the start, and the lender does not have to recompute anything as you pay down the loan.

What is Section 179?

Section 179 of the U.S. tax code lets a business deduct the full purchase price of qualifying equipment in the year it is placed in service, instead of depreciating it over several years.

It is intended to encourage small and mid-sized businesses to invest in productive equipment by giving them a meaningful first-year tax benefit.

Can I claim Section 179 on financed equipment?

Yes. The full Section 179 deduction is available even if you financed the equipment. You do not have to pay cash up front to claim it.

Two conditions still apply: the equipment must be placed in service during the tax year, and it must be used for business more than 50% of the time.

What equipment qualifies?

Most tangible business property qualifies, including:

  • Machinery and manufacturing equipment
  • Construction and farm equipment
  • Business-use trucks, vans, and certain vehicles (separate caps for SUVs and passenger vehicles)
  • Computers, printers, and off-the-shelf software
  • Office furniture and fixtures
  • Certain improvements to non-residential property (HVAC, roofing, fire protection, security)

Land, buildings, and inventory do not qualify.

What is the Section 179 deduction limit?

The annual cap and phase-out threshold change from year to year. For recent tax years the deduction cap has been in the millions of dollars, so single equipment purchases are typically fully deductible.

Always check the current IRS guidance, or ask a CPA, before relying on the full deduction in a purchase decision.

What tax rate should I enter in the savings calculator?

For a C-corporation, use the federal corporate rate (currently 21%).

For a pass-through entity (S-corp, LLC, partnership, sole proprietor), use the owner's marginal income tax rate, since the deduction flows through to the owner's personal return.

Add your state corporate or income tax rate if your state has one. If you are unsure, 21% is a reasonable default for a back-of-the-envelope estimate.

Does paying off a simple-interest equipment loan early save me money?

Usually not. The total interest on a simple-interest loan is calculated up front and built into the total of payments. Most equipment loan agreements do not refund unearned interest if you pay off early.

Read your loan documents to confirm whether prepayment savings or rebates apply. If you expect to pay off early, an amortized loan (where interest accrues on the remaining balance) is usually the better structure.