Financed equipment working on a site
Financed equipment working on a site

What Is Equipment Financing and How Does
It Work?

It's important to understand the options you have to acquire equipment for businesses like yours that rely on heavy equipment to get the job done. Whether you need to purchase your first machine, replace an aging machine, or expand your fleet, heavy equipment is a significant investment for your business. And, there are several ways to get the equipment you need and within your budget. Before you get started, it's best to evaluate your equipment needs to ensure you choose the best option for your business. 

Cat Financial offers flexible equipment financing and leasing options to make equipment more affordable and to help preserve your cash flow. Our financial options are developed specifically for Cat® customers and the unique needs of your business. Learn more about equipment financing below to ensure you're prepared when you're ready to acquire equipment. 


When it's time to acquire Cat® equipment, you generally have the option to pay in cash, finance with a loan, lease, or rent. Each option can offer many benefits for your business depending on your long or short-term equipment needs. Learn more about heavy equipment financing options.

Financing equipment can be a great option if you're not interested in paying cash for equipment. Equipment financing enables you to get a loan to purchase heavy machinery without paying in full in one transaction. Instead, a heavy equipment loan allows qualified customers to spread the full cost out with monthly payments over a negotiated period of time. Equipment financing is different from capital loan because equipment loans can only be used to acquire equipment. Typically, loan payments include the price of the machine as well as interest. 

The equipment you're buying with the loan serves as collateral. Should you default on the loan, the lender has the right to repossess the asset so they can resell it and recoup the remaining loan amount. As a result, equipment financing can be more cost-effective and less risky than other forms of financing to acquire heavy equipment. 

Financing heavy equipment can present many benefits for your business including:

  • A great solution for long-term equipment needs
  • Build equity through ownership
  • You own the equipment once all payments have been made
  • Free up cash for other business needs
  • Competitive rates and terms from Cat Financial
  • Special offers may be available to help you save
  • Flexible payment schedules for qualified customers

Note: All customers are subject to credit approval with Cat Financial. Not all customers will qualify. Contact your local Cat dealer for details. 

Compare your equipment financing options using this side by side comparison chart.

To help you make the right decision for your business, consider these factors:

How Long Do You Need the Equipment?

The first thing to consider before financing equipment is how long you will need equipment. Some machinery can be used for most of your projects, while others are only needed for a specific application or to complete a certain task. Understanding the scope of work can help you determine how long you will need equipment.

Financing equipment is a great option for long-term equipment needs as it allows you to own the equipment once all loan payments are complete. Financing heavy equipment allows you to preserve your cash flow and offers many benefits to businesses with long-term equipment needs. Alternatively, leasing or renting equipment are great options for short-term equipment needs as they allow you to use the equipment for an amount of time and return it when you're finished with it or the lease ends.

How Much Can You Afford?

You'll also want to consider your budget, which can influence the type of equipment you choose and how you acquire it. Financing equipment is usually more costly than leasing or renting as it usually includes an interest rate - a fee for borrowing money. Limited-time special offers can help reduce the interest and save you money. View special offers

Leasing and renting equipment are typically more cost-effective because you're paying for the use and the cost of depreciation for the equipment and not the full price of the machine. Note that leasing can have higher long-term costs since you're not paying a principal value. Learn more about the many benefits of equipment leasing

How to Find the Right Lender to Finance Equipment?

Choosing the right lender is important especially for businesses that rely on heavy equipment. Traditional banks and financial institutions have their strengths, but at Cat Financial, our team of experts knows your equipment and the challenges your industry can face. We're committed to the success of your business. And if you've been impacted by a natural disaster or economic downtown, we're here to help you through it. 


Applying for an equipment loan and lease is simple and convenient. We understand you're busy with running your business, which is why we aim to approve applications in under an hour.

 These four factors help determine your credit worthiness:

  • Credit rating
  • Equipment financing history
  • Credit history
  • Work on hand

If you have questions about our financing application, contact your local Cat dealer. Together, we can guide you through the process.


You can finance more than heavy equipment, such as maintenance, protection plans and physical damage insurance. Below, you'll learn more about the different things you can finance through Cat Financial. 

Preventive Maintenance Plans for Heavy Equipment

We understand equipment downtime can impact your bottom line. Preventative maintenance can help keep your equipment working on the job site longer and extend the life of your equipment. The Cat Customer Value Agreement (CVA) by Cat Financial can be packaged with your machine payment and provides you with a preventative maintenance parts kit with everything you need to keep your Cat machine running at peak performance including: 

Manage costs by locking in your preventative maintenance costs for the length of your contract.

  • The right genuine Cat parts delivered in 500-hour intervals through the life of your CVA and backed by the standard Caterpillar parts warranty.
  • Cat filters capture harmful particles and keep systems clean and Cat fluids* lubricate critical components to protect system performance.
  • Cat® Equipment Management subscription with a dedicated team monitoring machine hours and location. Cat digital services also make it easy for you to monitor your machine location, hours and fuel level from your desktop or mobile device.
  • Routine S•O•SSM** and analysis helps minimize operating costs and extend the lifespan of machine components.
  • Inspect your way to better productivity with Cat Inspect. It's simple to set up, easy to use and integrates with your other Cat data systems. 

*only included with Cat CVA inclusive of labor - available to upgrade at time of purchase or time of service
** S•O•SSM is not included with every CVA. Ask your local dealer for a CVA inclusive of S•O•SSM  

Equipment Protection Plans for Heavy Equipment

Even the best built machines will eventually require repairs. An Equipment Protection Plan (EPP) provide coverage beyond the standard machine warranty and protect against unplanned repair costs and defects covered in Cat manufacturer workmanship and materials. Choose from multiple levels of coverage to meet your business needs. You can also transfer the machine when you sell it within the same region the EPP was purchased. An EPP can also be packaged with your machine for one monthly payment for simplified budgeting.

Physical Damage Insurance for Heavy Equipment

On top of preventive maintenance plans and EPPs, you can also choose physical damage insurance. This insurance covers partial and total equipment losses from floods, fires, vandalism, theft and collision. There's a lot that can happen to your equipment you can't control, which is why you have the option to add Physical Damage Insurance. Learn more about Physical Damage Insurance for your machines.


Explore Your Financing Options With Cat Financial

Get the heavy equipment you need, fast with Cat Financial. You've got many options and we're here to help you acquire equipment, maintain it, and protect your investment. Connect with a dealer to get started today.

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