Calculate monthly lease payments and compare buy vs lease
This equipment lease calculator breaks down monthly lease payments into depreciation and finance charges, and compares the total cost of leasing versus buying. It is ideal for businesses evaluating equipment financing options. Leasing equipment can offer lower monthly payments, tax advantages, and the flexibility to upgrade regularly. This calculator breaks down lease payments into depreciation and finance components and provides a buy vs lease comparison to help businesses make informed capital equipment decisions.
Lease payment is calculated as depreciation (cost minus residual minus down payment divided by term) plus a finance charge based on the sum of cost and residual value.
Residual value is the estimated worth of the equipment at the end of the lease term. A higher residual value lowers monthly payments but may increase the purchase option price.
Leasing offers lower monthly payments, tax benefits, and the ability to upgrade equipment more frequently. Buying is more cost-effective for long-term use and offers ownership equity.
Commonly leased equipment includes office equipment (printers, copiers), medical devices, construction machinery, manufacturing equipment, IT hardware, and vehicles for business use.
Lease payments are typically fully tax-deductible as operating expenses, while purchased equipment must be depreciated over several years. Consult a tax professional for your specific situation.
At lease end, you typically have three options: return the equipment, purchase it at the residual value, or renew the lease on new equipment. Some leases include a $1 buyout option.
The money factor is a decimal representation of the interest rate. To convert to APR, multiply the money factor by 2400. For example, a money factor of 0.0025 equals 6% APR.