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Equipment Payments

Equipment lease vs. buy calculator

Settle the lease-versus-buy question the honest way, on total cost rather than monthly payment. Buying on a loan costs more per month but leaves you an asset you can sell; leasing costs less per month and leaves you nothing. Enter your numbers and see the real cost to use the equipment over the term, both ways.

§ 01 Your numbers

Change anything. The answer updates as you type.

The purchase price, the same figure for both the loan and the lease.
The period you are comparing. Use the same term for the loan and the lease to keep it fair.
Cash up front on the loan. A lease is assumed no-money-down here for a clean comparison.
The financing rate to buy, from your loan quote.
The lease finance rate as an APR (the money factor times 2,400). Leases often price a little lower than loans.
What the equipment is worth at the end of the term. If you buy, this is what you can sell it for; if you lease, it is the lessor's residual.
Net cost to buy
$21,876
  • Total paid if you finance it$29,376
  • Resale value at term end$7,500
  • Net cost to buy (after resale)$21,876
  • Net cost to lease (own nothing)$22,700
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Some links below are affiliate links. If you buy through them, Calcatrice may earn a commission at no extra cost to you. We only suggest tools that fit your result, and a company can't pay to show up here.

$15,000 to $40,000 net is a real decision. Whichever the total favors, confirm it with the residual and the tax treatment before signing.

What this assumes, and where it could be wrong

Every one of these is a place the number could be off. They are here because you should be able to check our working, not because we are hedging.

THE HONEST COMPARISON IS TOTAL COST TO USE, NOT MONTHLY PAYMENT.
A lease payment is almost always lower than a loan payment, because a lease only finances the depreciation, not the whole price. That makes leasing look cheaper and it is the wrong number to compare. The right one is what it costs to have the equipment for the term: buying, that is everything you paid minus what you sell it for at the end; leasing, it is everything you paid, because you return it and keep nothing

Buying counts a resale value; leasing does not. The single biggest reason to buy is that you own an asset at the end, and this calculator credits you its resale value. If the equipment holds its value well, buying usually wins on total cost; if it is obsolete in three years, the gap narrows or flips.

The comparison assumes you keep the equipment for the term either way. If you would replace it the moment the lease ends anyway, leasing's return-it-and-walk-away is worth more than the arithmetic shows. If you would run it for a decade, buying wins by more, because the loan ends and the lease payments would not.

Tax and cash flow are not in this, and they can decide it. Leases and purchases are deducted differently (a lease is usually an operating expense; a purchase can be depreciated or expensed under Section 179), and a lower monthly payment can matter more than total cost if cash is tight. This is the cash-cost comparison; take it to an accountant for the tax half.

The defaults are ours and are a starting point. The price, rates, and residual are yours, and a fair comparison needs the same term and the same residual on both sides, which is how the calculator is set up.

Frequently asked questions

Should I lease or buy equipment?
Compare total cost to use it over the term, not the monthly payment. Buying costs more per month but leaves you an asset to sell; leasing costs less per month and leaves you nothing. If the equipment holds its value and you will keep it, buying usually wins; if it goes obsolete fast or you will replace it anyway, leasing can win. The calculator shows both numbers.
Why is a lease payment lower than a loan payment?
Because a lease only finances the depreciation, the value the equipment loses over the term, while a loan finances the entire price. You are paying for less, so the monthly payment is smaller. But at the end of the lease you own nothing, so the lower payment does not mean a lower total cost.
Does buying equipment always cost less overall?
No. Buying usually wins when the equipment holds its resale value and you keep it a long time, because you own an asset and the loan eventually ends. Leasing can win when the equipment loses value fast, becomes obsolete, or you would replace it at term-end anyway. The residual value is the number that decides it.
What about the tax difference between leasing and buying?
It can flip the decision and it is not in this calculator. A lease is generally deducted as an operating expense; a purchase is depreciated, or expensed immediately under Section 179 up to a limit. Which is better depends on your profit, your tax year, and your accountant. This tool gives you the cash-cost comparison to take to them.

Related calculators

Equipment loanYour numbers

The monthly payment is not the cost. The interest over the term is, and a long term hides a large one behind a comfortable payment.

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Equipment leaseYour numbers

A lease payment is two things: what the equipment loses in value, and rent on the money. The residual decides most of it.

Open the calculator→