Equipment-finance glossary.

$1 buyout lease

A lease where you own the equipment at the end for a nominal $1. Payments are higher because it works much like financing.

Advance rate

The share of an invoice a factor pays you up front; the remainder (the reserve) is released when your customer pays, less the fee.

Amortization

Paying off a loan in equal periodic payments, where early payments are mostly interest and later ones mostly principal.

APR

Annual percentage rate — the yearly cost of borrowing expressed as a percentage, used to compare financing offers.

CCA

Capital Cost Allowance — the Canadian tax system’s method of deducting the cost of equipment over time on a declining-balance basis.

Down payment

Money you put toward the purchase up front. A larger down payment lowers the amount financed and your monthly payment.

Factoring

Selling your unpaid freight invoices to a factor for an immediate cash advance, so you don’t wait 30–60 days to get paid.

FMV lease

Fair-market-value lease — at the end you can buy the equipment for its market value, return it, or upgrade. Lower payments, no automatic ownership.

Lease line of credit

A pre-approved leasing limit you can draw on for repeat equipment purchases without reapplying each time.

Money factor

A way of expressing the financing charge in a lease. Multiply by 2,400 to approximate an equivalent annual interest rate.

Principal

The amount financed — the equipment price minus your down payment.

Refinance

Replacing an existing equipment loan with a new one — often to lower the payment, change the term, or free up cash flow.

Residual value

The equipment's estimated value at the end of a lease — what it would cost to buy the unit when the lease ends.

Section 179

A US tax provision that lets qualifying businesses expense part or all of equipment cost in the year it’s placed in service. Confirm details with your accountant.

Term

The length of the financing or lease, usually expressed in months (e.g. 60 months).

TRAC lease

Terminal Rental Adjustment Clause lease — common for vehicles; the residual is set up front and reconciled at the end.

Don't see a term? Ask us — we're happy to explain.