Buy vs Lease Equipment Calculator

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

Equipment Details
$
yr
Lease Terms
$
mo
Purchase Financing
%
mo
Tax & Depreciation
%
Other Costs
$
$
%
Buy NPV = -Loan Pmts - Maint + Tax Savings + Salvage Lease NPV = -Lease Pmts + Lease Tax Deduction
Recommendation
BUY
Save $0 over the equipment life
Total Cost to Buy
$0
Total Cost to Lease
$0
NPV of Buying
$0
NPV of Leasing
$0
Buy Tax Savings
$0
Lease Tax Deduction
$0
Buy vs Lease Total Cost
Buy
Lease
Buy Lease

How to Use This Calculator

1

Enter Equipment Details

Input the equipment purchase price, useful life, and salvage value at the end of its life.

2

Set Lease & Loan Terms

Enter your monthly lease payment and term, plus the purchase financing rate and loan duration.

3

Configure Tax Settings

Set your marginal tax rate and choose a depreciation method (straight-line or MACRS) for tax savings calculations.

4

Compare Results

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

Frequently Asked Questions

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 that can offset the higher upfront cost.

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.

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.

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.

Does this calculator account for all costs?

This calculator includes the major financial components: purchase price, financing costs, lease payments, tax deductions from depreciation and lease expenses, maintenance costs, and salvage value. It does not account for opportunity costs of down payments, insurance differences, or lease-end buyout options.

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