Equipment Lease vs Buy Calculator — NPV for US Small Business
Free equipment lease vs buy calculator: NPV of leasing vs purchasing for US small business. No signup.
Last updated 2026-05-28 · Davi Baptista
Read also: Full calculator guide, Equipment lease buyout calculator
How it works
An equipment lease vs buy calculator compares net present value of leasing versus purchasing business equipment with tax and maintenance assumptions.
This equipment lease vs buy calculator compares net present value of leasing versus purchasing machinery or vehicles for a US small business. An equipment leasing calculator should include term, payment, residual, tax depreciation, and maintenance. Enter lease payment, buy price, useful life, and discount rate for equipment lease vs buy calculator side-by-side totals. Equipment leasing calculator math is educational—Section 179, bonus depreciation, and sales tax vary by state. Use the equipment lease vs buy calculator before signing; read our lease buyout guide for end-of-term options.
Equipment lease vs buy NPV for US operators
Compare net present value of leasing versus purchasing business equipment with the same utilization horizon. Operating leases keep payments off the balance sheet in some structures; finance leases and loans capitalize the asset.
Section 179 and bonus depreciation can tilt buy toward ownership when utilization is high and maintenance is predictable. Low utilization or short projects may favor operating lease flexibility.
Include maintenance, insurance, residual value, and discount rate in both paths—NPV differences of a few thousand dollars often decide between lease quote and dealer finance.
Guide, examples, and methodology
How to use this equipment lease vs buy calculator
Enter lease payment, purchase price, loan terms (if buying), expected useful life, maintenance, insurance, and your discount rate. The calculator compares net present value (NPV) of leasing versus owning—useful for construction equipment, commercial vehicles, medical devices, and IT hardware.
Example (USD)
| Input | Lease path | Buy path |
|---|---|---|
| Asset cost | — | $85,000 |
| Monthly lease | $1,450 × 48 mo | — |
| Loan payment | — | $1,620 × 48 mo @ 7% |
| Outcome | Return at lease end | Own + residual value |
NPV and total cost of ownership
NPV discounts future cash flows to today's dollars using your hurdle rate (often WACC or a simple 8–12% for small business). Leasing may win on NPV when you need flexibility, preserve credit lines, or upgrade every 3–5 years. Buying wins when you keep assets long past loan payoff and capture full residual value.
Tax and depreciation (overview)
Purchases may qualify for Section 179 expensing or bonus depreciation in the purchase year—lease payments are often fully deductible as operating expenses. Rules change by entity type and asset class; this calculator accepts tax benefit inputs you provide but does not replace a CPA.
When leasing fits US small business
- Technology or vehicles you replace on a fixed cycle.
- Projects with uncertain duration—return equipment when work ends.
- Limited upfront capital but steady operating cash flow.
- Vendor maintenance bundled in the lease (check contract fine print).
Common mistakes
- Comparing lease payment to loan payment without residual or buyout.
- Ignoring excess wear charges at lease return.
- Using a 3-year analysis horizon for a 10-year asset.
- Forgetting insurance and maintenance in the buy scenario.
Next step
If you are already in a lease nearing end-of-term, run the equipment lease buyout calculator to compare residual price to fair market value before you sign a buyout or return paperwork.
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Frequently asked questions
What is the difference between an Operating Lease and a Capital Finance Lease?
An Operating Lease is a form of rental. The lessor retains ownership, and the lessee uses the equipment for a fraction of its life, returning it afterward (allowing for 100% tax deductions of payments as operational expenses). A Capital Finance Lease is essentially an installment-based purchase where the risks and rewards of ownership transfer to you, requiring the asset to sit on your balance sheet and be depreciated over time.
Are there limits on Section 179 tax deductions?
Yes. Section 179 limits change annually. In recent tax years, the maximum deduction limit typically caps around $1,150,000 to $1,220,000, with a phased expenditure limit beginning at $2,890,000. It is designed heavily to support small-to-midmarket enterprises and startups, ensuring larger multinationals are subject to standard longer depreciation pipelines.
Operating lease vs capital lease?
Operating: rent expense, return asset. Finance/capital: depreciate asset and amortize liability — economics similar to buying with debt.
Which is better for taxes?
Depends on jurisdiction: expensing lease payments vs depreciation + interest. Model both with your tax rate.