Equipment lease vs buy calculator.

How it is calculated

Each option is a list of monthly cash flows discounted at your rate (annual rate ÷ 12). Buy = down payment + discounted loan payments + any loan balance still owed at the end of the lease term − discounted end-of-term value − discounted tax savings. Lease = cash due at signing + discounted lease payments (less tax savings), plus the buyout and minus the end value if you keep the equipment. The lower present value wins. If you leave the tax rate at 0 the comparison is before tax.

When you return the equipment, the page also gives the end value at which buying and leasing tie: below it, leasing is cheaper.

Worked example

$100,000.00 equipment, a $2,000.00 per month 60-month lease returned at the end, against an 8% 60-month loan with no down payment, a $15,000.00 end value and an 8% discount rate. Buying has a present-value cost of $89,931.84 and leasing $98,636.87, so buying is cheaper by $8,705.02. The tie point is an end value of $2,030.86. With a 25% tax rate and straight-line depreciation over 5 years, buying costs $64,661.89 and leasing $73,977.65 in present value.

Sources and limits

This is a discounted-cash-flow comparison, not an accounting treatment. It does not apply tax recapture on a sale, Section 179 or bonus depreciation (see the Section 179 estimator for those), sales tax differences, residual guarantees, maintenance, or early-termination charges. Lease classification under accounting standards is outside this page. Enter the quotes you actually have.

FAQ

Is it better to lease or buy business equipment?

It depends on the quotes, how long you keep the equipment and what it is worth at the end. The calculator compares present-value cost so a high resale value favours buying and a short useful life favours leasing.

What discount rate should I use?

Use the return you could earn on the cash or the rate you would pay to borrow it. A higher rate favours the option with later payments.

Does the tax rate matter?

Lease payments and loan interest plus depreciation both reduce taxable income. Entering a tax rate applies both; leaving it at 0 compares before tax. Your accountant should confirm the actual treatment.

What if I buy the equipment out at the end of the lease?

Choose the buyout option and enter the price. The page then assumes you own the equipment at the end and counts its value, so the two options end in the same place.