# Buying vs. Leasing - Equipment Calculator

You can use this calculator to compare the cost of buying versus leasing equipment.

Notes

• Since the option to buy provides equity in the equipment, the application subtracts this amount from total costs to arrive at the amount in the Net cost field.
• The calculator determines the ending market value by multiplying the amount in the Residual percent field by the amount in the Purchase price field.
• The Lost interest on payments field displays the interest that could have been earned if the money spent on the equipment was invested instead.

## Example

Field Input
Purchase price \$20,000
Sales tax rate 7%
Residual percentage 60%
Down payment \$1,000 \$1,000
Term of loan or lease in months 60 24
Annual interest rate 8%
Monthly payment \$424.35
Annual rate of return 8% 8%

In this example, leasing would cost less than buying over the 24 month period in this comparison. The difference between the two options is \$922.18.

Notes

• The annual interest rate is the interest rate on the loan used to purchase the equipment.
• The annual rate of return is the rate of return expected on invested funds.
• The residual percentage equals the value of the equipment at the end of the lease period.

## Copying and pasting loan payment schedules into Excel or other applications

View this procedure to find out how you can copy loan payment schedules into Excel or other applications.