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Buy, finance, rent or lease equipment

Compare the four ways to get a machine, vehicle, computers or equipment into the business. The calculator brings every payment to present value, includes maintenance, insurance, resale value and tax savings, and shows the cash impact of each option.

Educational simulation. Not investment advice. Results are estimates based on the data you enter and do not replace advice from a qualified professional.

Reviewed on Oct 31, 2026

Example values for an industrial machine. Get real quotes and fill them in.

Financing
Rental
Lease
Money and taxes

Where expenses reduce income tax, rent, lease payments, interest, maintenance, insurance and depreciation of the purchased asset lower the tax bill. If your tax does not depend on expenses, use 0%.

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—Lowest-cost option
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Cost of each option in today’s money

Present value of all payments, net of resale value and tax benefit. Lower is better.

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Cash out, month by month

Cumulative payments for each option. In the last month, buying, financing and leasing recover the resale value.

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Cash impact: upfront and every month

What goes out on day one and the average monthly payment of each option.

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Comparison

The summary lists your inputs, results, formulas, assumptions and sources. The full report also includes the charts and interpretations, in color. In the print dialog, choose Save as PDF.

Method, assumptions and sources

Formulas

Cost in present value = −Σ monthly flow ÷ (1 + opportunity cost)^month
Buy and finance: monthly maintenance and insurance, depreciation over useful life, resale at the end; loan with fixed payments, balance paid off at the end if the term exceeds use
Lease: payments during use + residual value at the end, resale at market value
Tax benefit = tax rate × deductible expenses of the month (interest, maintenance, insurance, rent, lease, depreciation)

Assumptions and limits

  • The tax benefit is taken in the same month, assuming enough taxable profit. Recoverable sales taxes, fees, rent increases and obsolescence are not considered.
  • Lease, rental and loan terms vary by contract.

Official sources and references

Frequently asked questions

Is it better to buy or rent equipment?

It depends on the total cost in present value, how long you will use it, obsolescence and taxes. Long, intensive use tends to favor buying; technology that quickly becomes obsolete favors renting.

What is a lease with a purchase option?

You pay monthly installments to use the asset and, at the end, can buy it for the residual value. Terms and tax treatment depend on the contract and the country.

How do I read the default example?

For a $150,000 machine used for 48 months with 40% resale value at the end, the calculator compares the four options in today’s money at a 0.4% monthly opportunity cost and a 21% tax rate. Leasing is cheapest at $116,430, $2,724 below buying with cash ($119,154); renting costs $144,646.

Why compare in present value?

Because payments on different dates are not worth the same. Discounting at the opportunity cost puts every option on the same footing.

Do rent and lease payments reduce taxes?

Where business expenses are deductible, yes: they lower taxable profit, as do interest and depreciation on purchased equipment. Enter your effective tax rate on profit, or 0% if your tax does not depend on expenses.

Where do I get the numbers?

Price, interest and term from dealer and bank quotes; rent and lease payments from the offers; maintenance and insurance from the manufacturer or insurer; resale from prices of similar used equipment.

What does the calculator leave out?

Sales taxes you may recover, fees, rent increases and obsolescence. Review the contracts and ask an accountant about the tax treatment before signing.

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Buy, finance, rent or lease: how to decide

There are four common ways to get a machine, vehicle or computers into a business: pay cash, finance the purchase, rent, or lease with an option to buy. The cheapest option is rarely the one with the smallest total of payments, because money spent today could be earning a return.

Compare in present value

Bring every payment to today at your opportunity cost, the return the money would earn if it stayed invested. Cost in present value = Σ payment ÷ (1 + rate)^month, minus the resale value at the end and any tax savings.

What goes into each option

OptionYou payYou get back
Buy with cashPrice, maintenance, insuranceResale value
FinanceDown payment, installments with interest, maintenance, insuranceResale value
RentMonthly rent (often with maintenance)Nothing
LeaseLease payments, maintenance, residual value to keep itResale value

Taxes

Where business expenses reduce income tax, rent, lease payments, interest, maintenance and depreciation all lower the tax bill, which changes the comparison. Check the rules that apply to your business with an accountant.

Beyond the numbers

Long, intensive use tends to favor buying; fast-changing technology favors renting. Also consider cash on hand: buying outright can leave the business short of working capital.