Equipment Buy vs. Lease Calculator

Equipment Buy vs. Lease Calculator

Are you confused to choose between lease and purchase options for equipment acquisition? Your confusions will be cleared once the ACalculator simplifies the critical financial data regarding your business. By comparing both the lease and purchase options in light of vehicle information, this calculator will indicate the best option for you.
Purchase price
Amount of money required to purchase the equipment after deducting the manufacturer’s rebate.
Down payment
The cash down or capital reduction paid initially while entering the contract. This amount is termed as capital reduction in case of leases.
Sales tax rate
Percentage rate of tax to be charged on the equipment purchase. This tax is adjusted every time you make lease payments but charged on the total sale amount in case of equipment purchase.
Investment rate of return
Your expected rate of return from the amount you could invest. This amount reflects the earning potential of the money you could invest in the economy instead of purchasing or leasing. This is the opportunity cost of your valuable money.
Loan term in months
Number of months required to completely pay off the equipment loan. Number in months it will take to repay the financing. Normally the loans are paid within six years starting from three years. If this duration is greater than the loan’s duration, the options are judged for the time the lease contract was initiated. The excess term is used to calculate the remaining loan amount.
Loan interest rate
The rate of interest paid annually on the loan.
Other fees
Fees like licensing, documentation etc. that is paid initially while purchasing the equipment. This should not include the cash down.
Annual depreciation
This is the rate showing the value by which the purchased equipment will be depreciated every year. The rate can be as low as 10% and as high as more than 20%.
Market value of equipment
This is the residual value of the equipment after the lease is fully paid off.
Net cost of buying
The cost of purchasing the equipment instead of taking lease. This is calculated by deducting the residual value of the equipment from the total of upfront costs, interest lost, and loan balance outstanding at the time of lease expiration.
Lease term in months
Term length in months on the lease contract.
Lease interest rate
Rate of interest charged on the lease.
Other fees
Other than down payments, these are the fees like licensing, documentation etc. that is paid initially while purchasing the equipment.
Residual percent
It is the market value in percentage of the equipment after the lease contract expires. The more this rate becomes higher, the more the lease payment is reduced.
Security deposit
This is the money deposited by you initially when entered into the lease contract. This amount is refundable by the time the lease expires.
Net cost of lease
The net cost of leasing the equipment. This is calculated by adding upfront fees, interest lost for entering the lease (opportunity cost), and total lease payments.