Buy vs Lease Equipment Calculator

Compare buying vs leasing business equipment. See tax benefits, total cost, and which is better.
$
$
months
yrs
%
$

Lease Net Cost

$39,168.00

Buy Net Cost

$36,771.43

Better Option

Buy

Save $2,396.57

Lease Analysis

Total Lease Payments$57,600.00
Tax Deduction (100% of payments)$57,600.00
Tax Savings$18,432.00
Net Cost After Tax$39,168.00

Buy Analysis

Purchase Price$50,000.00
Depreciation Tax Savings$8,228.57
Salvage / Resale Value$5,000.00
Net Cost After Tax$36,771.43
With Section 179 (Year 1 Expense)$29,000.00
Sec 179 Tax Savings$16,000.00

Break-Even

Break-Even Point45 months

Use the Buy vs Lease Equipment Calculator above to calculate your results. Enter your values and see instant results — all calculations run in your browser.

Disclaimer: This calculator is for informational purposes only and does not constitute tax, financial, or legal advice. Results are estimates based on the information you provide and current rates. Always consult a qualified tax professional or financial advisor for advice specific to your situation.

How It Works

The Buy vs Lease Equipment Calculator helps businesses determine the most cost-effective way to acquire necessary equipment by comparing total ownership costs against leasing expenses. With equipment financing rates averaging 8-12% in 2026 and lease rates remaining competitive at 6-10%, this decision can significantly impact cash flow and tax planning.

The calculator uses net present value (NPV) analysis to compare the total cost of purchasing equipment (including financing costs, maintenance, and depreciation) against total lease payments over the same period. It factors in tax benefits like depreciation deductions for purchases and lease payment deductions, then discounts future cash flows to present value using your company's cost of capital.

Consider the equipment's useful life beyond the lease term, as purchasing may be more advantageous for long-term use equipment. Don't forget to include maintenance costs, insurance, and potential obsolescence risks in your analysis. Many businesses overlook the opportunity cost of the down payment when purchasing, which could be invested elsewhere for returns.

Manufacturing Equipment: $85,000 Purchase vs $1,850 Monthly Lease

  1. 1 A manufacturing company needs equipment costing $85,000 to purchase with a $15,000 down payment, financed at 9% for 5 years, versus leasing at $1,850 monthly for 5 years with a $3,000 security deposit.
  2. 2 Purchase total: $70,000 loan + $15,000 down + $22,400 interest + $12,000 maintenance - $17,000 tax savings (depreciation) = $92,400. Lease total: ($1,850 × 60 months) + $3,000 deposit - $22,200 tax savings = $91,800.
  3. 3 Using a 10% discount rate to calculate present value: Purchase NPV = $78,650, Lease NPV = $77,920. The lease option shows a $730 advantage in present value terms.
  4. 4 The lease option saves $730 in present value, making it the more cost-effective choice. However, with leasing, the company won't own the equipment after 5 years and may face additional costs if they need to continue using similar equipment beyond the lease term.

Source: SBA — Business Guide · Last updated: April 2026

Frequently Asked Questions

Is it better to buy or lease business equipment?
Buy if you want to own the asset long-term, the equipment has a long useful life, or you can take advantage of Section 179 or bonus depreciation. Lease if you need to preserve cash, the equipment becomes obsolete quickly, or you want predictable monthly expenses.
Can I deduct leased equipment payments?
Yes. Lease payments are generally 100% deductible as a business expense in the year paid. Purchased equipment is deducted through depreciation, Section 179, or bonus depreciation. Leasing spreads the deduction over the lease term; buying can front-load it.
What is an equipment lease buyout?
At the end of a lease, you may have the option to purchase the equipment at fair market value or a predetermined price ($1 buyout leases). A $1 buyout lease is essentially a financing arrangement and may be treated as a purchase for tax purposes.

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