Equipment Lease Vs Buy
Calculator

It compares the total cash outlay and ownership cost of buying equipment outright (or financing it) against the ongoing cost of leasing it, adjusted for the time value of money. Buying usually costs less over the equipment's full life, while leasing preserves cash and shifts obsolescence risk to the lessor.

A dollar paid in year three is cheaper in today's terms than a dollar paid now, so simply summing lease payments overstates their real cost relative to a lump sum paid today for a purchase. Discounting both paths to present value lets you compare them on equal footing rather than nominal totals.

If you buy, you keep whatever the equipment is worth at the end of the period, which effectively lowers your net cost of ownership. Leasing assumes you hand it back with no residual claim, so a high expected resale or salvage value tilts the math toward buying, while equipment that depreciates to near zero tilts it toward leasing.

It models the cash flow difference; tax treatment (Section 179 depreciation deductions for purchases versus deducting lease payments as an operating expense) can shift the after-tax comparison further, and those rules vary by jurisdiction and change year to year. Use this tool for the operating cash flow picture and confirm the tax angle with your accountant before deciding.

Leasing can still be the right call when preserving cash for growth, avoiding maintenance risk on equipment that becomes obsolete quickly, or keeping the balance sheet flexible matters more than minimizing total cost. If your cash is tight enough that a large purchase would strain payroll or inventory funding, the calculator's lower 'cheapest' number isn't the only thing that matters.