Equipment Financing vs. Leasing: What's Best for Food Trucks?
The right equipment financing strategy can save you thousands of dollars and provide the flexibility your food truck business needs. With equipment costs ranging from $50,000 to $200,000+, choosing between financing options is one of your most important business decisions.
The Financial Impact
Choosing the wrong financing option can cost you $20,000-$50,000 over the life of your equipment. The right choice depends on your credit, cash flow, business stage, and long-term goals.
Food truck equipment is expensive, but it's also essential for your business success. The challenge is finding the right balance between monthly cash flow and total cost of ownership. Each financing option has distinct advantages and trade-offs that can significantly impact your business's financial health.
Complete Financing Options Comparison
Equipment Loan
Traditional bank loan secured by equipment
Terms:
- Down: 10-20%
- Term: 3-7 years
- Rate: 4-8%
- Monthly: $800-1,500
Pros:
- Own equipment after payoff
- Tax deductions for interest
- Builds business credit
Cons:
- Higher monthly payments
- Requires good credit
- Equipment depreciates
Established businesses with good credit and cash flow
Equipment Lease
Rent equipment with option to buy or return
Terms:
- Down: 0-5%
- Term: 2-5 years
- Rate: 6-12%
- Monthly: $400-800
Pros:
- Lower monthly payments
- Minimal down payment
- Upgrade options available
Cons:
- Don't own equipment
- Higher total cost over time
- Mileage restrictions
Startups or businesses wanting flexibility
Rent-to-Own
Rent equipment with automatic ownership transfer
Terms:
- Down: 0-10%
- Term: 12-36 months
- Rate: 8-15%
- Monthly: $300-600
Pros:
- No credit check required
- Very low down payment
- Quick approval process
Cons:
- Highest interest rates
- Limited equipment selection
- Strict payment terms
New businesses with poor credit or limited capital
Equipment Financing
Specialized financing through equipment dealers
Terms:
- Down: 5-15%
- Term: 2-6 years
- Rate: 5-10%
- Monthly: $500-1,200
Pros:
- Equipment-specific terms
- Dealer relationships
- Flexible qualification
Cons:
- Limited to dealer inventory
- May require dealer financing
- Less competitive rates
First-time buyers or specific equipment needs
Real Cost Comparison
| Equipment | Purchase Price | Loan (5 years) | Lease (3 years) | Rent-to-Own (2 years) |
|---|---|---|---|---|
| Complete Food Truck Setup | $150,000 | $2,400/mo $172,800 total | $1,200/mo $86,400 total | $900/mo $32,400 total |
| Commercial Refrigerator | $8,000 | $128/mo $9,216 total | $64/mo $4,608 total | $48/mo $1,728 total |
| POS System | $3,000 | $48/mo $3,456 total | $24/mo $1,728 total | $18/mo $648 total |
Qualification Requirements
Equipment Loan
Required Documentation:
- Tax returns
- Financial statements
- Business plan
- Equipment quotes
Equipment Lease
Required Documentation:
- Bank statements
- Credit application
- Equipment specs
- Insurance proof
Rent-to-Own
Required Documentation:
- ID
- Proof of income
- Bank statements
- References
Equipment Financing
Required Documentation:
- Business license
- Tax returns
- Equipment quotes
- Financial statements
Real Business Case Studies
Taco Truck Texas
Key Factors:
Burger Bus Startup
Key Factors:
Decision Framework
Choose Your Financing Strategy
Choose Equipment Loan If:
- • You have good credit (680+)
- • You've been in business 2+ years
- • You have stable cash flow
- • You plan to keep equipment long-term
- • You want to build equity
- • You can afford higher monthly payments
Choose Equipment Lease If:
- • You want lower monthly payments
- • You need flexibility to upgrade
- • You're testing a new market
- • You have limited capital
- • You want maintenance included
- • You're not sure about long-term needs
Calculate Your Best Option
Use our equipment financing calculator to compare costs and find the best option for your specific situation and budget.