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.
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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 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.
Worked example: $50,000 equipment, 5-year horizon
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).
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.
| Equipment | Buy: Total Payments | Est. Resale (30%) | Net Buy Cost | Lease Total | Buy 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.
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 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.
Equipment financing terms defined
About this equipment buy vs. lease calculator
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