Equipment Lease vs Buy Calculator

Choose one comparison period

Set the number of months you expect to use the equipment. Both options must cover that same period. Comparing a three-year lease with five years of loan payments creates an uneven comparison unless the remaining asset and debt are handled at the three-year mark.

For the lease, enter the payment, payment timing, nonrefundable upfront charges, refundable deposit, expected deposit refund, and end charges. State whether you will return the equipment or exercise a quoted purchase option. Do not assume a deposit will be refunded if the contract or expected condition charges say otherwise.

For buying, choose cash purchase or financing. Enter purchase cost, down payment, note rate, loan term, fees, and the expected net resale proceeds at the comparison date. Net resale means the sale amount after selling costs. Add any operating costs that differ between the options, such as maintenance included in the lease but paid separately when buying.

Continue with Equipment Financing Calculator or SBA Loan Calculator for the next calculation.

How the comparison is calculated

The tool builds a cash-flow timeline for each option. Cash paid at the start, monthly costs, and final amounts all have a specific date in that timeline. The purchase side includes the outstanding loan balance at the horizon and credits the expected net resale proceeds. The lease side credits the expected deposit refund and includes any purchase option or return charge.

This approach makes the comparison reflect the economic position at the same end date. If you keep the purchased equipment, its estimated end value still matters as an asset you own; it is not cash already received. If the lease ends with a purchase, enter the resulting asset value on that side too.

You may also enter an annual discount rate to compare present values. That rate represents your chosen value of money over time, not a promised investment return. Setting it to 0% produces a simple undiscounted comparison. Regions Bank's lease-or-buy guidance also highlights the importance of outstanding debt and equipment value after the evaluation period.

Example: three years of equipment use

Assume an outright purchase costs $60,000 and the equipment's estimated net value after 36 months is $20,000. With no other costs and a 0% discount rate, the purchase's net modeled cost is $40,000.

Now assume a lease costs $1,500 at each month-end for 36 months. You pay a $3,000 refundable deposit at the start and receive the full $3,000 back at the end. You return the equipment, with no end charges. The lease's net cost is $54,000.

Under these assumptions, buying has a $14,000 lower net cost. But it needs more cash at the start and depends on achieving the estimated end value. If resale proceeds are lower or purchase maintenance is higher, the difference narrows. These are illustrative inputs, not available equipment offers.

Interpret cost and liquidity separately

A lower modeled net cost is not automatically the better operating choice. A lease may preserve cash, include service, or make replacement easier. Buying may offer more control and residual value. Review usage limits, repair obligations, early termination, insurance requirements, and return conditions alongside the numbers.

Change the resale estimate and maintenance cost to see whether the conclusion is robust. Also compare the upfront cash difference with your business's cash reserve. A discount rate can express opportunity cost, but it does not account for every operational risk.

Use the business loan calculator to inspect a purchase-financing quote. The invoice factoring calculator can help examine a separate working-capital problem if unpaid invoices are driving the need to preserve cash.

Scope of the result

This is a before-tax cash-flow comparison. It does not determine lease accounting classification, tax deductibility, depreciation, Section 179 treatment, or the tax on a sale. Use consistent tax treatment across offers and obtain a separate analysis if those differences materially affect the decision.

Frequently asked questions