Equipment Lease Calculator

Related Calculators

Table of contents

• How to use
• Common mistakes
• Definitions
• Methodology
• Limitations & assumptions
• Sources

Equipment price: The cash price of the equipment before financing and before subtracting the down payment.

Down payment: The initial part of the purchase price paid at the start of the deal [2].

Buyout choice: The end-of-lease purchase setup, such as $1 buyout, 10% buyout, or an FMV estimate.

FMV or buyout value: The estimated final purchase amount as a percent of the equipment price when the lease uses a fair market value style estimate.

Base monthly lease payment: The calculated lease payment before payment tax, fees, delivery, installation, maintenance, and insurance.

All-in monthly cash needed: The repeated monthly cash amount after adding payment tax, if selected, plus Maintenance or insurance.

Estimated cash due at signing: The upfront cash estimate, including Down payment, selected upfront costs, and the first All-in monthly cash needed.

End buyout value: The estimated amount paid at the end if you buy the equipment.

Mistake: Entering Equipment price after subtracting Down payment.
Fix: Put the full Equipment price in that field and put the upfront amount only in Down payment.

Mistake: Choosing FMV estimate but leaving FMV or buyout value blank or using a dollar amount.
Fix: Enter FMV or buyout value as a percent of the equipment price, such as 20 for 20%.

Mistake: Typing a monthly rate into Annual interest rate.
Fix: Enter the yearly rate from the quote in Annual interest rate, such as 8 for 8% per year.

Mistake: Turning on Sales or use tax handling but leaving Sales or use tax rate at 0 by accident.
Fix: Enter your tax rate as a percent, or choose Do not include tax if you do not want tax in the estimate.

Mistake: Comparing Base monthly lease payment with your bank balance instead of All-in monthly cash needed.
Fix: Use All-in monthly cash needed when Maintenance or insurance, payment tax, or other monthly add-ons apply.

Mistake: Treating Total all-in lease cost before buyout as the cost to own the equipment.
Fix: Use Total cost if you buy the equipment at the end when you expect to pay the End buyout value.

• The calculator uses a fixed-rate payment method. It does not model floating rates, seasonal payments, skipped payments, security deposits, or balloon payments other than the selected End buyout value.
• Sales or use tax handling is simplified. Real tax rules can depend on state, local rules, equipment type, exemption status, and how the lessor invoices the lease.
• Estimated cash due at signing assumes the first All-in monthly cash needed is due when the lease starts. If your quote bills the first payment later, subtract one all-in monthly payment from the signing estimate.
• FMV estimate is only a user-entered percent of Equipment price. The calculator does not appraise used equipment or predict market value.
• Doc or origination fees, Delivery or installation, and Maintenance or insurance are included only when you enter them. The calculator cannot know hidden fees in a lease agreement.
• The Monthly cashflow table repeats the same monthly amount for every month. It does not split principal and interest or show tax timing beyond the selected tax handling.

Payment setup

The calculator first subtracts Down payment from Equipment price to find the amount being financed. The End buyout value is set by Buyout choice: $1, 10% of Equipment price, or the FMV or buyout value percent entered by the user.

financed_amount = equipment_price - down_payment

end_buyout_value = 1, equipment_price * 0.10, or equipment_price * custom_residual_percent / 100

Base monthly lease payment

For a positive Annual interest rate, the calculator uses a fixed-payment annuity method with a final buyout value. The annual rate is divided by 12 to get a monthly rate.

monthly_rate = annual_rate_percent / 100 / 12

base_monthly_lease_payment = (financed_amount - end_buyout_value / (1 + monthly_rate)^lease_term_months) * monthly_rate / (1 - (1 + monthly_rate)^(-lease_term_months))

If Annual interest rate is 0, the calculator spreads the financed amount minus the buyout evenly across the lease term.

base_monthly_lease_payment = (financed_amount - end_buyout_value) / lease_term_months

Taxes, add-ons, and totals

When Sales or use tax handling is Add tax to each payment, tax is calculated from the Base monthly lease payment. When Sales or use tax handling is Pay tax upfront on equipment price, tax is calculated from Equipment price and added to signing cash instead.

monthly_payment_tax = base_monthly_lease_payment * sales_tax_rate / 100 when tax_treatment = per_payment; otherwise 0

upfront_tax = equipment_price * sales_tax_rate / 100 when tax_treatment = upfront_equipment; otherwise 0

all_in_monthly_cash_needed = base_monthly_lease_payment + monthly_payment_tax + monthly_maintenance_insurance

estimated_cash_due_at_signing = down_payment + upfront_tax + upfront_fees + delivery_installation + all_in_monthly_cash_needed

total_all_in_lease_cost_before_buyout = down_payment + upfront_tax + upfront_fees + delivery_installation + all_in_monthly_cash_needed * lease_term_months

cost_to_own_after_buyout = total_all_in_lease_cost_before_buyout + end_buyout_value

Mini example

Suppose Equipment price is $50,000, Down payment is $5,000, Buyout choice is 10% buyout, Lease term is 36 months, and Annual interest rate is 0%. The financed amount is $45,000 and the End buyout value is $5,000, so the Base monthly lease payment is ($45,000 - $5,000) / 36 = $1,111.11. If Sales or use tax handling adds 8% tax to each payment and Maintenance or insurance is $200 per month, Monthly tax and add-ons are $88.89 + $200 = $288.89, so All-in monthly cash needed is $1,400.00.