Free business planning calculator
Buy vs. Lease Equipment Calculator
Compare the true 5-year cost of buying equipment (with a loan) vs leasing it, including loan payments, depreciation tax savings, and lease deductions. See exactly which option is cheaper for your business.
Enter the minimum numbers needed to get a result.
Updated live as you type.
Planning estimate only. It does not include taxes, overhead allocation, depreciation, discounts, or other business-specific adjustments.
A buy vs. lease comparison calculates the true 5-year cost of each option: buying with a loan (down payment + loan payments − depreciation tax savings − interest tax savings) vs. leasing (total lease payments − lease deduction tax savings). Whichever produces a lower net cost is the cheaper option for your business.
Formula and example
Buy net cost = Down payment + Total loan payments − Tax savings (depreciation + interest); Lease net cost = Total lease payments − Tax savings (lease deductions)
$50K equipment, $10K down, 6%/60mo loan = $773/mo, total payments $46,380 + $10K down = $56,380. Depreciation $10K/yr × 5yr × 24% tax = $12K savings. Interest $6,380 × 24% = $1,531 savings. Net cost = $56,380 − $13,531 = $42,849. Lease $900/mo × 60mo = $54,000 − $12,960 tax savings = $41,040 net. Lease saves $1,809.
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Methodology & assumptions
Last updated: 2026-06-16Calculation method
Compares total 5-year cost of buying with a loan (down payment + amortized loan payments − tax savings from depreciation and interest deduction) vs leasing (total lease payments − tax deduction on lease expenses). Straight-line depreciation over 5 years with $0 salvage value. Assumes 100% business use.
Data sources
Uses the numbers you enter and standard small-business finance formulas. Benchmark comparisons use HustleFin industry benchmark pages where available.
Limitations
Does not include maintenance costs, residual/resale value, early buyout options, or Section 179 bonus depreciation (which can be up to $1.22M in 2026). Lease terms vary — some include maintenance. Actual tax savings depend on your specific tax situation. For planning purposes only, not tax advice.
Input definitions
- Equipment price: Total purchase price of the equipment.
- Down payment: Amount paid upfront when buying with a loan.
- Loan interest rate: Annual interest rate on the equipment loan.
- Loan term (months): Number of months to repay the loan.
- Lease monthly payment: Monthly lease payment for the same equipment.
- Lease term (months): Length of the lease agreement.
- Marginal tax rate: Your business marginal tax rate for deducting interest, depreciation, and lease payments.
Frequently asked questions
Is it better to buy or lease equipment?+
It depends on three factors: (1) Cash flow — leasing requires no large down payment. (2) Tax situation — leasing deducts 100% of payments immediately; buying deducts depreciation over multiple years (though Section 179 can allow full first-year expensing). (3) How long you'll use the equipment — buying typically wins over 5+ years; leasing wins when you need to upgrade frequently. Use this calculator to compare the actual numbers for your equipment.
Is leasing or buying equipment better for taxes?+
Leasing provides larger, more predictable tax deductions immediately — 100% of lease payments are deductible as a business expense in the year paid. Buying provides depreciation deductions spread over the asset's useful life, though Section 179 (up to $1,160,000 in 2026) and bonus depreciation (80% in 2026) can dramatically accelerate the deduction. For most small businesses, the cash flow benefit of leasing matters more than the tax difference.
What is the equipment lease vs buy break-even point?+
The break-even point is how long you need to own the equipment before buying becomes cheaper than leasing. This calculator shows the net 5-year cost of each option — if you plan to use the equipment longer than the break-even point, buying is usually better. Shorter-term needs or rapidly obsoleting equipment (computers, medical devices) tend to favor leasing.
What equipment makes sense to lease vs buy?+
Lease when: technology changes quickly (computers, copiers, medical devices), you need flexibility to upgrade every 2–3 years, or cash is tight. Buy when: equipment has a long useful life (heavy machinery, vehicles, HVAC), you qualify for Section 179 full expensing, or the 5-year lease cost clearly exceeds the purchase cost.
What is Section 179 and does this calculator use it?+
Section 179 lets businesses deduct the full purchase price of qualifying equipment in the year it's placed in service, up to $1,160,000 in 2026. This calculator uses straight-line depreciation over 5 years — it does not apply Section 179 or bonus depreciation. If you expect to use Section 179, your actual tax savings from buying will be significantly higher than shown here, likely making buying more attractive.
Does this calculator include maintenance costs?+
No. Maintenance is not included because costs vary widely and some leases include full maintenance (full-service lease). If your lease includes maintenance, the lease is even more attractive relative to buying. Add your expected annual maintenance costs to the buy-side cost for a complete comparison.
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