Should you lease or buy equipment? This isn't just a math question—it's a strategic choice between flexibility and ownership. Leasing offers predictable costs, no maintenance hassles, and easy upgrades; buying builds equity and offers tax depreciation write-offs. Our calculator totals all costs for both paths: lease payments vs. loan payments, maintenance, depreciation, and residual value. Many businesses choose the wrong option because they only compare base costs and ignore hidden expenses like excess-mileage fees or repair bills.
Equipment with short useful lives (computers, printing presses) often lean toward leasing; longer-life assets (industrial machinery, vehicles) often favor buying. This tool shows break-even: how long must you own equipment before purchase becomes cheaper than continuous leasing? A $50k printer might seem expensive to buy, but leasing for 5 years could cost more. Factor in technology risk: will this equipment become obsolete fast, or is it stable long-term?
Tax benefits can tip the scales significantly. Depreciation deductions from ownership (especially with Section 179 expensing) can save 25–35% of purchase cost in taxes. Lease payments are fully deductible too, but you don't build equity. Run both scenarios with your tax situation to see which option delivers true savings—not just lowest sticker price. The right choice depends on your cash flow, tax bracket, and long-term asset strategy.
Leasing vs. Buying: The Trade-Offs
Leasing: fixed monthly cost, no maintenance, no residual risk, off-balance-sheet (accounting advantage), no equity build-up. Buying: ownership, equity builds, tax depreciation write-offs, flexibility, but maintenance risk and obsolescence.
When Leasing Makes Sense
Tech that obsolesces (computers, machinery with rapid innovation). Predictable budgets (fixed lease cost). Low daily-use (equipment sits idle). Avoid large residual loss. Example: leasing printer ($300/month) vs. buying ($5,000 + maintenance). Lease wins if technology changes fast.
When Buying Makes Sense
Equipment with long useful life (industrial machinery, vehicles driven 100k+ miles). High daily-use (breaks even faster on lease costs). You can absorb residual/depreciation risk. Example: commercial truck (20k/year miles) = buying wins (lasts 10+ years, depreciation slower). Leasing would cost $400k+ total.
Tax Benefits of Buying
Depreciation deduction: buy $50k equipment, deduct $5k–$10k/year (depends on depreciation method). Reduces taxable income, saves 25–35% in taxes (depends on tax bracket). Lease payments also deductible, but don't build equity. Run both scenarios with tax rates.
Hidden Lease Costs
Excess mileage fees ($0.15–$0.30/mile beyond allowance). Wear-and-tear charges ($500–$2,000+). Termination fees if ending early. Lease escalation clauses (payments increase annually). Read fine print; these can add 10–30% to total cost.