Lease vs Buy Calculator
Buying needs $4,000.00 up front and −$71.13 more a month than leasing, but you own an asset worth $12,000.00 at the end.
How the lease vs buy calculation works
Buying costs the down payment plus the loan payments
$40,000 equipment with $4,000 down leaves $36,000 on a loan. At 8% over 48 months that's $878.87 a month, or $42,185.53 in total.
Subtract what the equipment is worth at the end
If you can sell it for $12,000 after four years, the net cost of buying is $4,000 + $42,185.53 − $12,000 = $34,185.53.
Leasing costs the payments plus any fees
48 payments of $950 is $45,600. Add upfront fees or an end-of-lease buyout if you'll pay them.
The lower total wins on cash
This compares cash over the term and leaves out taxes and the time value of money. A true lease is deducted as rent; bought equipment is depreciated, or expensed with Section 179 or bonus depreciation. Ask your accountant which applies to you.
Worked example. Buying $40,000 of equipment with $4,000 down and an 8% loan over 48 months costs $878.87 a month. After selling it for $12,000, the net cost is $34,185.53. Leasing at $950 a month costs $45,600, so buying saves $11,414.47.
Lease vs Buy FAQ
Is it better to lease or buy equipment?
Buying usually costs less if you keep the equipment for most of its useful life and it holds resale value. Leasing suits equipment that dates quickly or when you need to keep cash free.
How do you calculate lease vs buy?
Add up what you pay over the same period both ways. Buy: down payment + loan payments − resale value. Lease: monthly payments × months + fees. The smaller number costs less.
What resale value should I use?
Look at prices for the same model and age on used-equipment marketplaces, or ask the dealer. If unsure, try a low value: if buying still wins, the answer is solid.
Are lease payments tax deductible?
Usually, yes. The IRS lets you deduct rent for property you use in your business but don't own. You can't deduct it as rent if you have or will receive equity in or title to the property, so a lease with a nominal buyout, such as $1, is generally treated as a purchase. This calculator compares cash before tax.
Can I use Section 179 or bonus depreciation if I buy?
Often, yes, and that can make buying cheaper after tax. Section 179 needs property acquired by purchase. For 2026 the limit is $2,560,000, reduced once purchases pass $4,090,000. The One Big Beautiful Bill Act restored 100% bonus depreciation for qualified property acquired and placed in service after January 19, 2025. Equipment you lease from someone else can't be depreciated by you. See the Section 179 calculator, and check your case with a tax adviser.
Does the calculator include taxes or interest you could earn on cash?
No. It compares the cash you pay over the term. To see the after-tax effect, work out the tax saving from the lease deduction and from depreciation or Section 179, then compare. To count the time value of money, discount both sets of payments with the NPV calculator.
Sources: IRS Publication 334: Tax Guide for Small Business (rent expense) · IRS Publication 946: How to Depreciate Property · IRS Instructions for Form 4562 · IRS Rev. Proc. 2025-32 (2026 Section 179 limits)