Equipment Lease vs Buy Calculator - U.S.

Use the Lease vs Buy Calculator below to help determine whether you should lease or buy business equipment. It calculates monthly payments and your total net cost. Compare the amounts, to determine which option is better for your business.

Fill out the form and click "Calculate". For a detailed report, click on the "View Report" button.


Purchase price
Total purchase price. Price should be after any manufacturer's rebate.

Down payment
Amount paid as a down payment, which for leases is often called a capital reduction.

Sales tax rate
Percentage sales tax to be charged on this purchase. Sales tax is included in each lease payment. Sales tax for buying is charged on the total sale amount.

Investment rate of return
Rate of return on investments. This is the return that you would make if you were to invest your down payment or security deposit instead of using it in your equipment purchase or lease

The actual rate of return is largely dependent on the types of investments you select. The S&P 500 for the 10 years ending Dec. 31st, 2012 had an annual compounded rate of return of 7.1%, including reinvestment of dividends. From January 1970 through the end of 2012, the average annual compounded rate of return for the S&P 500, including reinvestment of dividends, was approximately 10.1% (source: Since 1970, the highest 12-month return was 61% (June 1982 through June 1983). The lowest 12-month return was -43% (March 2008 to March 2009). Savings accounts at a bank may pay as little as 0.25% or less but carry significantly lower risk of loss of principal balances.

It is important to remember that these scenarios are hypothetical and that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are generally subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment. It is not possible to invest directly in an index and the compounded rate of return noted above does not reflect sales charges and other fees that funds and/or investment companies may charge.

Term in months:
Term in months for your lease or your loan.

Loan term in months
Term in months for your equipment loan. Typically this is 36, 48, 60 or 72 months. If your loan term is longer than your lease term, we compare the buy vs lease options to the time the lease expires, and then use your remaining loan term to calculator you outstanding loan balance.

Loan interest rate
Annual interest rate for your loan.

Other fees
Any fee, other than a capital reduction or down payment, required to be paid at the time of purchase. This may include license, title transfer fees, etc.

Annual depreciation
The rate of depreciation gauges how fast your new equipment will lose its market value. A high depreciation rate is about 20% per year, medium is 15% per year and low is 10% per year.

Market value of equipment
Value of your equipment after the lease term is over.

Net cost of buying
This is the total cost of buying your equipment. This is calculated as:

  1. + Total up Front Costs (down payment + other fees)
  2. + Lost interest
  3. + Outstanding loan balance at time lease expires
  4. - Market value of equipment at time lease expires
  5. = Net cost of buying

The lost interest on your purchase includes any interest you would have earned at your investment rate of return on the buy option's down payment and other fees. If the monthly payment for leasing is less than the monthly payment for buying, this also includes any lost interest due to the higher monthly payments. If leasing is more expensive than buying, your interest costs for buying are reduced by the amount of interest you would earn on the difference.