Free calculator

Equipment lease vs buy calculator

Compare a loan with a fair market value lease on the same equipment: the monthly payment, the cash out of pocket, and the real cost once you count what the equipment is still worth.

Enter the equipment price, the term in months, the down payment on the loan, both rates, and what the equipment is worth at the end of the term. This page assumes the lease takes no down payment. Both starting rates are only examples, so put in the rates you were quoted. A guess, as a percent of the price. It is also what the lease would charge to buy it at fair market value.

Your estimate: $100,000 over 60 months, 25% end value

Buy with a loan

$1,912.23 a month, $10,000 down, $124,734 paid over the term, $99,734 after what it is worth

FMV lease

$1,801.86 a month, $108,112 paid over the term and at the end

The lease payment is $110 a month lower. Over the term, buying costs $8,378 less, once you count what the equipment is still worth.

An estimate with level payments at the end of each month. Many leases take the first payment, or the first and last, up front. Fees and sales tax are not included.

Free, soft pull only.

A lower payment is only half the answer

These examples use $100,000 over 60 months, 10% down on the loan and an example rate of 10% on both.

• 15%, $15,000: loan $1,912 a month and $109,734 in cost, lease $1,931 a month and $115,860 in cost
• 25%, $25,000: loan $1,912 a month and $99,734 in cost, lease $1,802 a month and $108,112 in cost
• 40%, $40,000: loan $1,912 a month and $84,734 in cost, lease $1,608 a month and $96,489 in cost

Why the lease payment is lower

A lease payment is usually lower because you are not paying for the part of the equipment that is left when the term ends. The cost line takes that into account by crediting the loan with what the equipment is still worth.

When each one tends to fit

Leasing tends to fit equipment that ages fast or that you plan to replace, and a business that wants to keep cash in hand. Buying tends to fit equipment with a long working life and a real resale market, where you plan to run it past the term.

Taxes can change the answer

A loan or $1 buyout is generally treated as a purchase, which can open up Section 179, and a true FMV lease is generally treated as rent. This page leaves taxes out, so ask your CPA before you decide.

Lease or buy questions, answered

Is it better to lease or buy equipment?
It depends on how long you will keep it. Buying usually costs less if you run the equipment past the term and it holds value. Leasing usually means a lower payment and less cash up front, and it fits equipment you plan to replace.

How does the calculator work out the cost?
For the loan, it adds the down payment and every payment, then subtracts what you said the equipment is worth at the end. For the lease, it adds every payment. If you buy it at fair market value at the end, you pay what it is worth and own something worth the same, so the cost stays the same.

Why does the lease need a rate?
A lease has a rate built in even when it is not printed on the paper. If you only have a quoted payment, try rates in the box until the lease payment matches your quote, and you will have a fair comparison with the loan.

Does using the calculator affect my credit?
No. The calculator runs in your browser and nothing you type is saved or sent. If you then ask EFN to find lenders that fit your deal, EFN runs a soft pull only, which does not affect your credit score.

Does this cover a TRAC lease or a $1 buyout?
No. This page compares a loan with a fair market value lease. A $1 buyout works like a purchase, and the $1 buyout calculator compares it with an FMV lease. A TRAC lease has its own guide.

See which lenders fit your deal.

One short application, soft pull only, and free for you. A person reviews your file and matches it with a lender that does deals like yours. That lender sets the rate and terms, and it can tell you which structures it offers.

Financing or leasing: the guide · $1 buyout vs fair market value lease calculator · Equipment loan payment calculator

This calculator gives estimates only. It is not a quote, an offer or a pre-approval, and nothing you type here is saved or sent anywhere. It is not tax advice. Equipment Funding Network is a match and routing service, not a lender. The lender sets the rate and terms.