Equipment Lease Vs. Buy Calculator
Compare the after-tax present cost of leasing equipment with financing a purchase, including residual value and opportunity cost.
What Is the Equipment Lease Vs. Buy Calculator?
The Equipment Lease Vs. Buy Calculator compares complete lease and purchase cash flows. Leasing includes up-front fees, periodic payments and tax deductibility. Purchasing includes the down payment, financed payments, maintenance, depreciation-related tax assumptions and the equipment’s after-tax residual value. Both paths are discounted to present value for comparison.
How It Works
Enter the lease term, payments and fees, then describe the purchase price, financing terms, maintenance and expected resale value. Set the business tax rate and discount rate explicitly. The workspace reports present cost for each path, the difference, equivalent monthly cost and a calculation trace; change the residual value or discount rate to test the assumptions most likely to reverse the decision.
When to Use It
Use it when comparing a vendor lease with a bank or manufacturer-financed purchase, planning a fleet or equipment refresh, or documenting the economic assumptions behind a capital-spending decision.
Frequently Asked Questions
- Why use present value?
- A dollar paid today costs more economically than a dollar paid years from now. Discounting puts every payment and resale receipt on the same date for a fair comparison.
- Is the cheaper option always better?
- No. Flexibility, upgrade cycles, maintenance responsibility, borrowing capacity, obsolescence and contract restrictions may matter more than a small modeled cost difference.
- Are tax deductions guaranteed?
- No. Eligibility and timing depend on jurisdiction, entity, asset and current tax rules. Treat the tax inputs as scenarios and confirm material deductions with a qualified tax professional.
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