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Free equipment buy vs lease calculator

Enter the purchase price and loan terms alongside the lease payment — this equipment buy vs lease calculator compares total cost of ownership over the same term, updated live, as you type.

InputsLive
Vehicle price
$
Term
mo
Buy
Down payment
$
Loan APR
%
Resale value
$
Lease
Cap cost
$
Residual value
$
Money factor
Result
Buying is cheaper
$597
Buy: $18,595 · Lease: $19,192 over 36 mo
Buy total cost$18,595
Lease total cost$19,192
Better optionbuy
Savings$597

Does not include sales tax, insurance, maintenance, or mileage penalties. Actual costs depend on usage and market conditions.

Results are estimates. Consult a professional.

How it's calculated

How the equipment buy vs. lease calculator works

Buying and leasing equipment both put the asset in your hands, but they differ radically in cash flow timing, tax treatment, and total economic cost. The buy-vs.-lease decision comes down to comparing the net present value (NPV) of each path — which requires accounting for financing costs, tax deductions, and what the asset is worth at the end of the period.

On the tax side, the contrast is stark: lease payments are typically 100% deductible in the year paid (operating lease under ASC 842), while purchased equipment is deducted over its MACRS recovery period — unless Section 179 or bonus depreciation allows immediate expensing. The right answer depends on your tax rate, cash position, and how long you plan to use the asset.

Buy total cost = sum of all loan payments estimated resale value at end of term
Lease total cost = monthly lease payment × lease term (months)
Net advantage = |buy total cost lease total cost|
PV of buy = Σ [loan payment t ÷ (1 + r)^t] resale value ÷ (1 + r)^n
SBA — Equipment Financing: Buy vs. Lease
Example

Worked example: $50,000 equipment, 5-year horizon

Example: $50,000 piece of equipment — buy at 8%/5yr vs. lease at $900/month

A company needs a $50,000 piece of equipment for 5 years. Option A: purchase with a 5-year loan at 8% APR. Option B: operating lease at $900/month with no purchase option. Estimated resale value after 5 years: $15,000 (30% of cost).

Monthly loan payment = $50,000 × [0.667% × (1.00667)^60] ÷ [(1.00667)^60 1] ≈ $1,014
Buy total payments = $1,014 × 60 = $60,840
Buy net cost = $60,840 $15,000 resale = $45,840
Lease total cost = $900 × 60 = $54,000
Net advantage of buying = $54,000 $45,840 = $8,160 saved
$8,160
Net saving from buying vs. leasing over 5 years — before tax effects. Section 179 expensing could make the buy option even more attractive in year 1.
Quick reference

Total cost comparison: buy vs. lease for $50k and $100k equipment

The table compares nominal total cost for buying (8% / 5-year loan) versus leasing, along with estimated resale and net buy cost. Lease rates are representative; actual quotes vary by lender, asset type, and credit profile.

EquipmentBuy: Total PaymentsEst. Resale (30%)Net Buy CostLease TotalBuy Saves
$50,000$60,840$15,000$45,840$54,000 ($900/mo)$8,160
$100,000$121,680$30,000$91,680$102,000 ($1,700/mo)$10,320

Source: Loan payments calculated at 8% APR / 60 months; 30% resale assumption; representative lease rates

When to choose leasing instead: technology assets that become obsolete within the lease term, equipment needed for a project shorter than 5 years, or when preserving the credit line and down payment cash matters more than nominal cost savings.

Practical tips

Tips for the equipment buy vs. lease decision

The nominal cost comparison is a starting point, not the full picture. Tax treatment, cash flow timing, balance sheet presentation, and the asset's expected useful life relative to the lease term all influence the true economic outcome.

  • Use Section 179 to tilt the math toward buying — deducting the full $50,000 in year 1 (up to the $1.16M 2024 limit) at a 25% effective tax rate saves $12,500 in tax immediately, often swinging the comparison decisively toward purchase.
  • Lease fast-depreciating technology — computers, servers, and diagnostic equipment that lose 50%+ of value in 3 years are poor buy candidates; leasing transfers obsolescence risk to the lessor.
  • Compare present values, not nominal totals — money paid in year 5 is worth less than money paid today; discounting both scenarios at your cost of capital gives a more accurate comparison.
  • Check the lease end terms carefully — a fair market value (FMV) lease returns the asset; a $1 buyout lease is economically closer to a loan and may need to be capitalized on your balance sheet under ASC 842.
  • Factor in maintenance and insurance — full-service leases bundle these costs; purchase loans do not. Always compare on a fully-loaded basis to avoid underestimating the true cost of ownership.
Accuracy & limits

Accuracy and limitations

The calculator uses simplified inputs: a fixed loan rate, constant monthly lease payment, and a single estimated resale value. In practice, loan rates are negotiated and vary with credit; lease payments include residual guarantees and fees; and resale values depend on market conditions, asset condition, and timing. PV calculations are sensitive to the discount rate assumption.

This calculator is for educational and planning purposes only and does not constitute financial, tax, or legal advice. Not financial advice — the buy vs. lease decision has significant tax, accounting (ASC 842), and cash flow implications. Consult a CPA or CFO before committing to either option for major equipment acquisitions.

Glossary

Equipment financing terms defined

A lease where the lessor retains ownership and the lessee returns the asset at end of term. Payments are typically 100% deductible as operating expenses under IRS rules.
A lease that transfers substantially all risks and rewards of ownership to the lessee. Under ASC 842, finance leases are capitalized on the balance sheet as an asset and liability.
IRS provision allowing immediate deduction of the full cost of qualifying business property in the year of purchase, up to $1.16 million (2024). Effectively eliminates the multi-year depreciation schedule.
A first-year depreciation deduction available for qualifying assets — 60% in 2024, phasing down annually. Applies to costs not claimed under Section 179.
The current value of a stream of future payments, discounted at your cost of capital. Comparing NPV of buy vs. lease gives a time-adjusted comparison that accounts for the value of money paid later.
The estimated value of the asset at the end of the lease or loan term. A higher residual value favors buying; the lessee captures it on sale.
A lease where the lessee has the option to purchase the asset at end of term for its then-current fair market value. Generally treated as a true operating lease for tax purposes.
About

About this equipment buy vs. lease calculator

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Questions

Frequently asked questions about the free equipment buy vs lease calculator

An equipment buy vs lease calculator is a free online tool that helps you compare buying equipment (loan + resale) against leasing for the same term. Buy total = total loan payments − resale value. Lease total = sum of lease payments. Compare and decide. It runs entirely in your browser with instant results and no sign-up.
No — these calculators provide quick estimates for planning and decisions. For tax filings, financial reporting, or formal valuations, use a CPA / CFA.
Most ratios assume GAAP figures from financial statements. For cash-basis or tax-basis filings, adjust the inputs accordingly.
Core finance formulas (DCF, IRR, depreciation methods, payment math) are stable. Tax-specific calculators (like-kind, repossession) reflect post-TCJA / 2025 rules where applicable.

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