AssetCenter
Equipment lease calculator
Work out the monthly payment on an equipment lease or loan, or the interest rate hidden in a quote you’ve been given. Enter the price, the term and the buyout at the end; the calculator shows the payment, the lease rate factor, what you pay in total and how the balance falls each year.
What you pay over the lease
Balance by year
| Year | Payments | Interest | Principal | Balance owed |
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How an equipment lease payment is worked out
A lease payment repays the amount financed, less whatever is still owed at the end, plus interest on the balance each month. It is the same sum as a loan, except that a lease usually leaves a residual and takes each payment at the start of the month.
Payment = (financed − residual ÷ (1 + r)ⁿ) × r ÷ (1 − (1 + r)⁻ⁿ)
In advance: divide by (1 + r)
Here r is the yearly rate divided by 12 and n is the number of months. With the example figures, $50,000 over 60 months at 9% with a $1 buyout comes to $1,030.18 a month paid in advance, or $1,037.90 in arrears.
Checking a quote
Lessors often quote a monthly payment or a lease rate factor rather than an interest rate. The rate factor is the payment divided by the equipment cost: 0.022 means $22 a month for every $1,000. Choose Check a quote, enter the payment and the terms, and the calculator works back to the yearly rate it implies, so you can compare it with a bank loan.
$1 buyout, 10% option or fair market value
- $1 buyout. You pay off almost the whole cost and own the equipment at the end. It is a loan in all but name, and for tax it is usually treated as a purchase, so you depreciate the equipment and can use Section 179.
- 10% purchase option. Lower payments, then 10% of the original cost to keep the equipment. Usually treated as a purchase too.
- Fair market value. The lowest payments. At the end you return the equipment, renew, or buy it at whatever it is then worth. The payments are usually deductible as rent.
How a particular lease is treated for tax and in your accounts depends on its terms, so ask your accountant before you sign. If you only need the machine some of the time, the rent vs buy calculator compares owning it with renting by the day.
Equipment lease FAQ
Like a loan payment on the amount financed, less the present value of whatever is still owed at the end, at the lease’s monthly rate over its term. If payments are due in advance, the first is made at signing and each payment is one month’s interest smaller.
The monthly payment divided by the equipment cost. A factor of 0.0215 on $50,000 is a payment of $1,075 a month, or $21.50 for every $1,000. It hides the interest rate, so use the quote check to turn it back into a yearly rate.
A $1 buyout lease pays off the whole cost and you own the equipment at the end; it is usually treated as a purchase for tax. A fair market value lease has lower payments because a residual is left unpaid; at the end you return the equipment, renew, or buy it at its then value.
Sales tax on payments, documentation and origination fees, insurance, and security deposits or extra payments in advance. Add fees to the cost if they are financed, and check the lease agreement for the rest.
Keep leased and owned equipment in one place
AssetCenter records each machine with its cost, lease or purchase documents and end dates, who has it and what it has cost to keep, so the buyout decision comes with the machine’s real history. Free for up to 25 assets.