Equipment Lease Calculator - Lease vs Buy

Use this Equipment Lease Calculator to pursue the best Equipment Lease Financing strategy. The Buy versus Lease calculator calculates monthly payments and your total net cost. By comparing these amounts, you can determine which is the better value and which equipment lease financing startegy is best for your business.

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Equipment Lease vs Buy Calculator

- Definitions

Equipment Lease Financing - Equipment Leasing is a financing option that can be a better choice for some business owners who have limited resources or who plan to change or upgrade their equipment frequently.  On the other hand, buying equipment may be a better choice for establishes businesses that has the recourses and where the equipment has a long useful life,  Any decision to buy or lease should be evaluated on a case-by-case basis. This Equipment lease vs Buy calculator assists you in making that choice.

Purchase price - Total equipment purchase price.
Down payment - Amount paid as a down payment, which for leases is often called a capital reduction.
Sales tax rate - Sales tax percentage to be charged on this purchase. Sales tax is included in each lease payment. Sales tax for a purchase 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 purchase or lease.
The actual rate of return is largely dependant on the type of investments you select. From January 1970 to December 2007, the average compounded rate of return for the S&P 500, including reinvestment of dividends, was approximately 11.4% per year.
It is important to remember 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.


Term in months - Term in months for your lease or your loan.
Other fees - Any fee, other than a capital reduction or down payment, required to be paid at the close of the lease or loan.
Annual of depreciation - The rate of depreciation gauges how fast your new purchase 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.
Interest rate - Annual interest rate for your loan or your lease.
Residual percent - For equipment leases, this is the remaining value after the lease term expires. The higher this amount is, the lower your lease payment will be.
Security deposit - Required deposit on leases. The security deposit is refunded to you at the end of your lease (depending on excessive wear or damage).
Lost interest on buy option - This 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 equipment leasing is less than the monthly payment for buying, this also includes any lost interest due to the higher monthly payments for buying. If equipment leasing is more expensive than buying, your interest costs for buying are reduced by the amount of interest you would earn on the difference.
Lost interest on lease option - This includes any interest you would have earned at your investment rate of return on the lease option's down payment, security deposit and other fees. Please see the definition for "Lost interest on buy option" for an explanation on how we account for any interest you might earn by having a lower monthly equipment lease payment.



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