Buy vs Lease Equipment Calculator

Compare the total cost and NPV of purchasing versus leasing business equipment

Quick Scenarios:
Equipment Details
$
yr
Lease Terms
$
mo
$
Purchase Financing
%
mo
$
Tax & Depreciation
%
Other Costs
$
$
%
Buy NPV = -Down Pmt - Loan Pmts - Maint + Tax Savings + Salvage Lease NPV = -Lease Pmts - Buyout + Lease Tax Deduction
Recommendation
BUY
Save $0 over the equipment life
Lease beats buy if monthly payment < $0/mo
Total Cost to Buy
$0
Total Cost to Lease
$0
Total Interest Paid
$0
NPV of Leasing
$0
Buy Tax Savings
$0
Lease Tax Deduction
$0
Buy vs Lease Total Cost
Buy
Lease
Buy Lease
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How to Use This Calculator

1

Enter Equipment Details

Input the equipment purchase price and useful life. Use the Quick Scenario presets to start with realistic defaults for common equipment types.

2

Set Lease & Loan Terms

Enter your monthly lease payment and term, plus the purchase financing rate, loan duration, and optional down payment or lease-end buyout.

3

Configure Tax Settings

Set your marginal tax rate and choose a depreciation method. Enable Section 179 to model full first-year expensing — a major advantage for buying.

4

Compare Results

Review total costs, the breakeven lease payment threshold, NPV analysis, and monthly cash flows to make an informed buy vs lease decision.

Formulas & Methods

V

inp.value.replace(/[^\d.]/g, '')

R

annualRate / 100 / 12

Annual

depreciable / life

Key Terms

Equipment CostAn input parameter used in buy vs lease equipment calculations. Adjust this value to see how it affects your results.
Useful Life (years)An input parameter used in buy vs lease equipment calculations. Adjust this value to see how it affects your results.
Monthly Lease PaymentAn input parameter used in buy vs lease equipment calculations. Adjust this value to see how it affects your results.
Lease TermAn input parameter used in buy vs lease equipment calculations. Adjust this value to see how it affects your results.
Financing Rate (APR)An input parameter used in buy vs lease equipment calculations. Adjust this value to see how it affects your results.
Loan TermAn input parameter used in buy vs lease equipment calculations. Adjust this value to see how it affects your results.

Real-World Examples

TI

TechStart Inc.

B2B SaaS startup with $2M ARR and 15 employees

Equipment Cost
$25,000
Useful Life (years)
24
Monthly Lease Payment
$8,500
Lease Term
12 months
Estimated total
$24,800

Try entering TechStart Inc.'s values above to see the detailed breakdown.

Understanding Buy vs Lease Equipment

What Is Buy vs Lease Equipment?

Buy vs Lease Equipment is a fundamental concept that this calculator helps you understand and apply. Whether you're a beginner or experienced professional, having precise calculations at your fingertips saves time and reduces errors.

Why It Matters

Understanding buy vs lease equipment helps you make informed decisions backed by data rather than guesswork. Small miscalculations can compound into significant errors, making accurate tools essential for planning and analysis.

How It Works

The Buy vs Lease Equipment Calculator applies established formulas and methodologies to your specific inputs. Results update in real-time, letting you experiment with different scenarios to find the optimal approach for your situation.

Tips & Best Practices

  • Start with realistic values — use actual data when available rather than rough estimates for more meaningful results.
  • Compare scenarios — try different input combinations to understand how each variable affects the outcome.
  • Save your work — use the Share button to bookmark specific calculations for future reference.
  • Consult professionals — for critical decisions, use calculator results as a starting point and verify with a qualified expert.
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Frequently Asked Questions

Strategy When is it better to buy equipment?
Buying is typically better when you plan to use the equipment for its full useful life, the equipment holds its value well, you have available capital or favorable financing, and you want to build equity in the asset. Buying also provides depreciation tax benefits — especially powerful when combined with Section 179 full expensing in year 1.
Strategy When is leasing the better option?
Leasing is often better when you need equipment for a shorter period, want to preserve cash flow, need to upgrade frequently due to technological changes, or when the equipment depreciates rapidly. Lease payments are fully deductible as operating expenses, simplifying tax treatment. Use the breakeven lease payment stat to see exactly at what monthly rate leasing becomes the better deal.
Basics What is MACRS depreciation and how does it affect the analysis?
MACRS (Modified Accelerated Cost Recovery System) front-loads depreciation deductions, giving you larger tax savings in earlier years compared to straight-line depreciation. This improves the NPV of buying since earlier cash flows are worth more in present value terms. MACRS 5-year is common for computers and vehicles; MACRS 7-year covers most manufacturing equipment.
Advanced What is Section 179 and how does it change the calculation?
Section 179 of the IRS tax code lets businesses deduct the full purchase price of qualifying equipment in the year it is placed in service, rather than depreciating it over years. The 2024 deduction limit is $1,160,000. Enable this toggle to model the scenario — it often dramatically improves the NPV of buying by delivering the full tax benefit in year 1 instead of spread across the asset life.
Basics How does the discount rate affect the comparison?
The discount rate represents your cost of capital or required rate of return. A higher discount rate reduces the present value of future cash flows more aggressively, which can shift the comparison since buying and leasing have different payment timing patterns. MACRS and Section 179 become more valuable at higher discount rates because they accelerate tax savings to earlier years.
Advanced What is the breakeven lease payment?
The breakeven lease payment is the monthly lease amount at which buying and leasing are exactly equivalent on an NPV basis. If your actual lease payment is below this figure, leasing offers a better NPV. Above it, buying is superior. This is the most actionable number when negotiating a lease — you know exactly the ceiling you should target.
Advanced Does this calculator account for all costs?
This calculator includes the major financial components: purchase price, down payment, financing costs, lease payments, lease-end buyout, tax deductions from depreciation (including Section 179) and lease expenses, maintenance costs, and salvage value. It does not account for insurance differences, security deposits, or opportunity cost of capital beyond the down payment.