Lease or buy the equipment? Compare the after-tax cost.
Enter the quote you were given for a purchase loan and for a lease. The calculator puts both on one after-tax, present-value basis, shows the interest rate hiding in the lease, and finds the resale value at which the two cost the same. It runs privately in your browser.
Your two quotes
Payments are monthly in arrears. Interest and lease payments save tax as they are paid; depreciation saves tax at the end of each year. Any gain on the equipment's sale over its remaining tax basis is taxed at your rate. Not modelled: Section 179 dollar limits and income caps, business-use percentage, state differences, maintenance, insurance and downtime.
Result
After-tax present-value cost of buying
After-tax present-value cost of leasing
Break-even resale value
Interest rate implied by the lease
Monthly loan payment
Cash out over the term, before tax (buy / lease)
Deduction method compared
Same quotes, five ways to deduct a purchase
Method
Buy cost
Buying saves
Sensitivity
How much buying saves (negative: leasing is cheaper) by resale value and discount rate
Common questions
Is it cheaper to lease or buy business equipment?
It depends on four things: the interest rate hidden in the lease, how fast you can deduct a purchase,
what the equipment is worth when you are finished with it, and your tax rate. Comparing monthly payments
hides all four. This calculator turns both quotes into an after-tax present-value cost over the same
period, so the comparison is one number you can sanity-check against your accountant's view.
What interest rate is my equipment lease really charging?
A lease rarely quotes a rate. Find the rate at which your monthly payments, the amount due at signing and
the value at the end of the term add up to the equipment price: that is the rate you are paying to use
someone else's money. The calculator solves it for you using your resale estimate, or your buyout price if
you plan to keep the equipment. Compare it with the loan APR you were offered; a lease can still win when
it carries a higher rate, but only if resale value or tax treatment makes up the difference.
How much does Section 179 or bonus depreciation change the answer?
Deducting the whole purchase in year one pulls tax savings forward, which lowers the present-value cost of
buying; slower methods such as MACRS spread the same deduction over several years. The calculator re-runs
your quotes under five methods so you can see how much of the result comes from the deduction itself. Whether
you actually qualify for expensing depends on your business, your income and the equipment, so ask your tax
preparer before relying on it.
What resale value makes leasing and buying equal?
The break-even resale value is the end-of-term price at which both paths cost the same after tax. If you
expect the equipment to fetch more, buying wins; if less, leasing does. It is usually the most useful number
here, because resale value is the input you know least about and it is often easier to judge whether the
equipment will beat a figure than to predict an exact price.
Is my equipment quote uploaded anywhere?
No. The calculator runs entirely in your browser. Your prices, rates and tax rate are never sent anywhere.
The share link stores your inputs in the link itself, so anyone you send it to sees those numbers, and the
optional usage counter records only which features were used and the day.