Buying vs. Leasing - Equipment
You can use this calculator to compare the cost of buying or leasing equipment.
To open this calculator, click Calculators in the toolbar, and then click Business > Buying vs. Leasing - Equipment in the left panel.
You can export the data as a PDF file or clear all data that you entered. For more information, see Financial calculators.
Notes
- Since the option to buy provides equity in the equipment, the calculator subtracts this amount from total costs to arrive at the amounts in the Net Cost section.
- The calculator determines the ending market value by multiplying the amount in the Residual Percentage field by the amount in the Purchase Price field.
- The Lost Interest on Payments section displays the interest you could have earned if you had invested the money spent on the equipment.
Example
Field | Input | |
---|---|---|
Purchase price | $20,000 | |
Sales tax rate | 7% | |
Residual percentage | 60% | |
Buying | Leasing | |
Down payment | $1,000 | $1,000 |
Term of loan or lease in months | 60 | 24 |
Annual interest rate | 8% | |
Monthly payment | $424.35 | |
Annual rate of return | 8% | 8% |
In this comparison, leasing costs less than buying over a 24 month period. The difference between the two options is $922.18.
Notes
- The annual interest rate is the interest rate on the loan used to purchase the equipment.
- The annual rate of return is the rate of return expected on invested funds.
- The residual percentage equals the value of the equipment at the end of the lease period.
Internal notes
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