Home/Resources/Glossary/Equipment Finance Agreement
Glossary Term

Equipment Finance Agreement

A loan-style contract where you own the equipment from day one.

All glossary terms

In short

An Equipment Finance Agreement (EFA) is a loan-style contract where you own the equipment from day one, and the lender registers a security interest until the balance is repaid. It's a direct path to ownership without a lease structure.

How an EFA works

An EFA is essentially a secured loan built around a specific asset:

  • You own the equipment immediately and carry it on your books.
  • The lender registers a security interest (a lien) against the asset until you finish paying.
  • You make fixed payments over the term, with no buyout at the end — you already own it.
  • Once repaid, the lender releases the lien and the asset is unencumbered.

EFA vs. a lease

The key difference from a lease is ownership timing: with an EFA you own the asset from the start, which can be advantageous for depreciation and long-term use. A lease keeps the lender as owner until any buyout. If you plan to keep the equipment for its full life, an EFA is often the cleanest structure — confirm the tax treatment with your accountant.

Common questions

Is there a buyout at the end of an EFA?

No. Because you own the equipment from day one, there's no purchase option to exercise — the lien is simply released when the balance is paid.

How is an EFA different from a conditional sales contract?

Both lead to ownership. With an EFA you own the asset up front and the lender holds a security interest; a conditional sales contract holds title with the lender until the final payment.

General information only. This page is educational and does not constitute financial, legal, or tax advice. All financing is subject to credit review and lender approval. Rates, terms, and eligibility vary by applicant, asset, and lender, and are not guaranteed. Any figures or examples are illustrative. Please speak with a qualified advisor about your specific situation.