Equipment Financing Calculator

Should You Finance or Lease Your Business Equipment?

Every business owner faces this decision: buy equipment with a loan or lease it? Both have real advantages depending on your situation, and the right answer depends on factors most people overlook. Tax implications, opportunity cost, residual value, and total cost of ownership all affect the outcome. This calculator runs the full comparison with your actual numbers so you can see which option costs less.

Equipment financing lets you own the asset outright after payoff. You build equity, benefit from Section 179 tax deductions, and keep the residual value when you sell or trade in. Leasing keeps monthly costs lower (often with no down payment), but you return the equipment at end of term with no equity. The cost difference can be significant over the useful life of the equipment.

Understanding Section 179

Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment in the year it is placed in service, up to $1,160,000. Instead of depreciating the cost over 5 to 7 years, you take the entire deduction in Year 1. For a $150,000 equipment purchase at a 25% tax rate, that is $37,500 in immediate tax savings. This front-loaded benefit often makes financing significantly cheaper than leasing on a net-cost basis. Section 179 applies to purchased (financed) equipment and some capital leases, but not operating leases.

When Leasing Makes Sense

Leasing is not always the more expensive option. For technology that becomes obsolete quickly (IT equipment, medical imaging), leasing lets you upgrade every few years without being stuck with outdated gear. Startups with limited cash benefit from zero down payment requirements. Seasonal businesses may prefer the predictability of fixed lease payments. And some businesses prefer keeping assets off the balance sheet. Use the calculator above to compare both options with your specific terms.

Getting the Best Equipment Financing Rate

Equipment financing rates typically range from 7% to 14%, with the best rates going to businesses with strong credit and stable revenue. Because the equipment itself serves as collateral, qualification requirements are often more flexible than unsecured term loans. A larger down payment (10% to 20%) can lower your rate and monthly payment. Use our loan payment calculator to model different scenarios, or check your DSCR to see how lenders will view your capacity. Talk to a funding specialist to compare equipment financing offers with no credit impact.