> ## Documentation Index
> Fetch the complete documentation index at: https://docs.layerfi.com/llms.txt
> Use this file to discover all available pages before exploring further.

# Equipment financing

Equipment financing funds the purchase of equipment. Create the loan with at least one `ASSET` [proceed](/api-reference/loan/loan#loan-proceed-object) that creates (or links) the financed [asset](/api-reference/asset/asset); the API does not require it, but in practice there should be one. If the financing covers more than the equipment's cost, add a cash `DISBURSEMENT` proceed for the remainder.

## Step 1: Create the loan

Create a loan with `loan_type` set to `EQUIPMENT_FINANCING`, `original_principal`, and `loan_term_months`. In the example below, a \$42,000 loan funds a \$40,000 forklift (an `ASSET` proceed that creates the asset) with the remaining \$2,000 disbursed as cash. Giving the new asset an `external_id` lets you record its depreciation later without storing Layer's IDs.

```bash Request theme={null}
curl --request POST \
  --url https://sandbox.layerfi.com/v1/businesses/{businessId}/loans \
  --header 'Authorization: Bearer <token>' \
  --header 'Content-Type: application/json' \
  --data '{
  "loan_type": "EQUIPMENT_FINANCING",
  "external_id": "equip-001",
  "display_name": "Forklift financing",
  "origination_date": "2024-01-15",
  "original_principal": 4200000,
  "loan_term_months": 48,
  "proceeds": [
    {
      "loan_proceed_type": "ASSET",
      "amount": 4000000,
      "date": "2024-01-15",
      "asset": {
        "new_asset": {
          "name": "Forklift",
          "external_id": "equip-001-forklift",
          "asset_type": "EQUIPMENT",
          "original_value": 4000000,
          "useful_life_months": 60,
          "accumulated_depreciation_account": "ACCUMULATED_DEPRECIATION"
        }
      }
    },
    {
      "loan_proceed_type": "DISBURSEMENT",
      "amount": 200000,
      "date": "2024-01-15",
      "method": "ACH"
    }
  ]
}'
```

Track the financed asset's depreciation over time with [asset value updates](/api-reference/asset/asset#asset-value-update-object), referencing the asset by its `asset_external_id` (for example, `equip-001-forklift`).

## Step 2: Record repayments

Equipment financing repayments work exactly like [term loan repayments](/guides/loans/term-loans#step-2-record-repayments): each is a [loan payment](/api-reference/loan/loan#loan-payment-object) split into `PRINCIPAL` and `INTEREST`, and if you have an amortization schedule we recommend pre-creating the installments with `defer_posting` set to `true`.