Business Equipment Lease Calculator
Compare leasing versus buying equipment. See total costs, tax implications, and which option saves money.
How the Business Equipment Lease Calculator works
Enter equipment price, lease terms, interest rates, and tax bracket. Compare total costs of leasing versus buying to make the best financing decision.
Leasing preserves cash but costs more long-term. This calculator shows the true cost of each option so you can make the right financing choice.
How it works
Tutorial
Deciding whether to lease or buy equipment affects your cash flow, taxes, and total costs. Leasing preserves cash upfront but usually costs more over time. Buying costs more upfront but you own the asset and build equity.
This calculator shows total costs for each option including tax benefits, helping you make the right choice based on your cash situation and how long you’ll use the equipment.
The Comparison
| Factor | Lease | Buy |
|---|---|---|
| Upfront Cost | First month only | Down payment + closing |
| Monthly Cost | Lease payment | Loan payment (if financed) |
| Ownership | You don’t own it | You own it |
| Tax Deduction | Full payment deductible | Depreciation + interest deductible |
Example: $100,000 Equipment for 5 Years
Step 1: Calculate Purchase Option Cost
| Item | Amount |
|---|---|
| Equipment Price | $100,000 |
| Down Payment (20%) | $20,000 |
| Loan (5 years at 6%) | $80,000 |
| Interest Paid Over 5 Years | $13,200 |
| Total Payments | $113,200 |
| Tax Savings (30% bracket) | -$33,960 |
| Resale Value After 5 Years | -$30,000 |
| Net Cost to Own | $49,240 |
Calculation:$113,200 – $33,960 – $30,000 = $49,240
Step 2: Calculate Lease Option Cost
| Item | Amount |
|---|---|
| Monthly Lease Payment | $2,100 |
| Lease Term | 60 months |
| Total Lease Payments | $126,000 |
| Tax Savings (30% bracket) | -$37,800 |
| Buyout at End | $0 |
| Net Cost to Lease | $88,200 |
Calculation:$126,000 – $37,800 = $88,200
Step 3: Compare Total Costs
| Option | Net Cost | Upfront Cash |
|---|---|---|
| Purchase | $49,240 | $20,000 |
| Lease | $88,200 | $2,100 |
| Difference | $38,960 | $17,900 |
Buying saves $38,960 over 5 years
What This Means
Purchasing costs $38,960 less than leasing over 5 years, but requires $20,000 upfront versus $2,100 for leasing. Choose based on your situation:
Buy if:
– You have cash or can get low-interest financing
– You’ll use equipment 5+ years
– Equipment holds resale value
– You want to build equity
Lease if:
– Cash is very tight
– Technology changes fast (equipment becomes obsolete)
– You need flexibility to upgrade
– You only need it short-term
For most businesses with decent cash flow, buying costs much less long-term. But if $20,000 upfront would hurt your cash position, the extra cost of leasing might be worth preserving working capital.
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