Equipment loan vs lease

Buying equipment with a loan and leasing it both get you the same equipment, but they can cost quite different amounts once you add everything up. This calculator compares the total you’d actually pay under each option, so you can see which works out cheaper.

It can help you answer questions like:

• Is it cheaper overall to buy this equipment or lease it?
• How much extra am I really paying by leasing instead of buying?
• Which option fits my monthly cash flow better?

What you’ll need to enter:

• Equipment cost, loan rate and loan term — if you bought it outright with a loan. We work out the loan repayments for you. (Example: $40,000 at 8% over 48 months.)
• Lease monthly payment and lease term — taken straight from your lease quote. (Example: $950 a month for 48 months.)

How it works
For the loan, we calculate the monthly repayment and add it up over the full term. For the lease, we simply multiply the monthly payment by the number of months. Then we compare the two totals.

What the result tells you
With the example numbers, the loan totals around $46,870 while the lease totals $45,600 — in this case, leasing comes out about $1,270 cheaper over the four years. Change the numbers to match your actual quotes to see which wins for you.

A few things worth thinking about beyond just the total cost:

1. Ownership matters too. At the end of a loan, you own the equipment outright — at the end of a lease, you often don’t (unless there’s a buy-out option). Factor that into your comparison.
2. Check what’s included in the lease. Some leases bundle in maintenance or replacement, which a loan wouldn’t cover — that can make a slightly more expensive lease worth it.
3. Think about how long you’ll actually use it. If the equipment might be outdated or unnecessary in a couple of years, leasing can avoid being stuck with something you no longer need.
4. Compare the monthly cash flow impact, not just the total. A loan with a bigger deposit might have a lower monthly cost than a lease — run both through the Business loan calculator to check.

In short: the cheapest option on paper isn’t always the best fit for your business — use this as one input alongside how you actually plan to use the equipment.