How to Refinance Equipment Loans for Better Rates or Terms

Let’s Talk About Equipment Loan Refinancing

You bought the excavator. You’ve made the payments. You’ve proven your business is solid. So now what?

If your original equipment loan is starting to feel like dead weight—high interest, big monthly hits, or terms that don’t fit anymore—it might be time for a financial tune-up. That’s where refinancing comes in.

Refinancing your construction equipment loan can be one of the easiest ways to cut costs, free up cash flow, or simply fix a deal that doesn’t match where your business is today.

Let’s break it down.

What Does It Mean to Refinance an Equipment Loan?

Refinancing is just replacing your current loan with a new one—ideally with better terms.

You might refinance to:

• Get a lower interest rate
  
  
• Reduce your monthly payment
  
  
• Switch from a variable to a fixed rate
  
  
• Extend the loan term to improve cash flow
  
  
• Pay off the original lender and roll the balance into a new structure
  
  

Think of it like trading in a pair of too-tight boots for something that actually fits. Same job, better comfort.

Why Refinancing Could Be a Smart Move Right Now

2025 has brought some stabilization in interest rates after a few years of hikes and volatility. If you financed a machine during the height of inflation or with limited credit history, there’s a decent chance you’re overpaying.

And if your business has grown? Even better. More revenue and time in business means lenders are more likely to offer you lower rates.

Example:

• Original loan (2022): $90,000 at 12% over 5 years
  
  
• Monthly payment: $2,002
  
  
• Remaining balance after 2 years: ~$57,000
  
  
• Refinance at 8% for remaining 3 years:
  
  
• New monthly payment: $1,781
  
  
• Total savings: $7,956 over the life of the loan
  
  

Not bad for filling out a few forms.

When Should You Consider Refinancing?

Refinancing isn’t right for everyone. But it’s worth exploring if:

• Your interest rate is above 9–10%
  
  
• You’ve improved your credit score or business revenue
  
  
• You need to reduce monthly payments
  
  
• You want to consolidate multiple loans or equipment payments
  
  
• Your original loan has a balloon payment coming up
  
  

And of course, if your current lender just isn’t great to work with, refinancing might give you more than just financial relief—it might bring peace of mind.

What You’ll Need to Refinance

Refinancing is usually faster than your original loan, but you’ll still need to show lenders you’re a good bet.

Here’s what most will ask for:

• Loan payoff amount or remaining balance
  
  
• Business bank statements (usually 3–6 months)
  
  
• Equipment details (make, model, year, condition)
  
  
• Original purchase documents or current financing terms
  
  
• Credit score and time in business (minimum 6–12 months)
  
  

Bonus: If your machine is in good shape and has strong resale value, that helps too. Lenders want collateral that holds up.

The SBA's application tips can help if you’re unsure what to prep.

Tips to Get the Best Refinancing Deal

• Check your credit before applying. Even small improvements in your score can mean lower rates.
  
  
• Shop multiple lenders. Don’t settle for the first offer. Get 2–3 quotes and compare.
  
  
• Watch for fees. Some lenders charge early payoff penalties or new origination fees—make sure your savings outweigh the costs.
  
  
• Ask about flexible terms. Want seasonal payments or deferred starts? Ask. More lenders offer this than you think.
  
  

Also, if you’ve got multiple equipment loans or leases? Ask if you can consolidate them. It can simplify your books and potentially lower your blended rate.

Real-World Scenario: How Refinancing Helped a Growing Firm

Rachel owns a small demolition and hauling business in the Carolinas. She financed a dump truck and skid steer in 2021 when her credit was just fair.

By early 2025, she’d doubled her revenue and improved her credit score to 710. She refinanced both pieces of equipment into one loan with better terms. Her new monthly payment dropped by $700—and she shaved six months off her original payoff schedule.

Now she’s looking at expanding her crew. That’s the kind of domino effect refinancing can kickstart.

Red Flags to Avoid

• Extending your term too long: Lower payments are nice, but don’t add unnecessary years if your machine will age out first.
  
  
• Overpaying in fees: Ask for a breakdown. If refinance fees eat your savings, it’s not worth it.
  
  
• Refinancing too often: Every new loan hits your credit and can trigger fees. Make sure it's truly a better deal.
  
  

And be wary of lenders pushing short-term cash advance products as “refinancing.” Those come with high rates and fast repayment schedules that often hurt more than they help.

Final Word: Make Your Equipment Work for Your Wallet

Refinancing isn’t just a financial trick—it’s a smart business move when done right. You wouldn’t keep running a machine that costs more to repair than replace, right? Same goes for loans.

If your current financing no longer fits your business, change it. The right loan should support your cash flow—not strain it.

Ready to explore refinancing? Talk to National Legacy Capital Group. Their team works with contractors to restructure equipment loans for better terms—without the red tape or surprises. Fast, flexible, and built for real businesses like yours.

Frequently Asked Questions (FAQ)

Can I refinance even if I leased the equipment originally?
Sometimes. If your lease includes a buyout option or is nearing the end, you may be able to refinance the residual amount.

Will refinancing hurt my credit?
The credit check may cause a minor dip, but paying off the old loan and staying current on the new one can improve your score over time.

Do I need a new appraisal for used equipment?
Possibly. Lenders may ask for an inspection or valuation to confirm the equipment’s current worth.

Can I refinance with the same lender?
Yes. Some lenders offer internal refinance programs. But it’s still smart to compare offers from other lenders to ensure you’re getting the best deal.