Equipment Loan Calculator
Compare financing business equipment outright against a fair-market-value lease, and factor in the Section 179 deduction that changes the arithmetic entirely.
Equipment Loan Calculator
Results recalculate instantly on every keystroke. Nothing you type is transmitted.
What this result does not account for
- Results are a model, not a quotation — an institution's own figures govern.
- Every input is an assumption; change one and the answer changes with it.
- Rounding is applied only at the display layer, so totals may differ by a cent from a statement that rounds each line.
In short: Equipment can be financed or leased. An $85,000 loan at 8.75% over five years costs $1,754.16 monthly; a lease with a 10% residual costs $1,640.73. Section 179 expensing can recover $17,850.00 at a 21% rate, cutting the effective cost to $87,399.89.
Formula
A lease finances only the value consumed during the term, discounting the residual back to today, which is why the payment is lower.
Worked Example
- Price the loan. $85,000 at 8.75% over 60 months = $1,754.16.
- Discount the residual. A 10% residual of $8,500.00 discounted back reduces the financed amount.
- Price the lease. The payment falls to $1,640.73, saving $113.44 monthly.
- Compare totals. Lease plus buyout is $106,943.65 against $105,249.89 for the loan.
- Apply Section 179. Expensing $85,000 at 21% recovers $17,850.00.
Analyst note. The lease saves $113.44 a month but costs $1,693.76 more in total once the buyout is included — you are simply deferring the residual and paying interest on it. The genuinely decisive factor is tax: Section 179 lets you expense the full $85,000 in year one when you buy, recovering $17,850.00 and cutting the effective cost to $87,399.89. Lease payments are deductible too, but spread across the term rather than front-loaded.
Strengths & Limits Of This Model
Where this engine is strong
- Runs entirely in your browser — no figure you type is transmitted or stored.
- Shows the full working, so every number can be traced and challenged.
- Free, unmetered and free of affiliate incentives.
Where it stops
- Generalised assumptions cannot capture every individual circumstance.
- Jurisdiction-specific rules and mid-year changes may not be reflected.
- A model output is not a substitute for a professional review of your position.
Practical Use Cases
Deciding whether to buy or lease machinery
Buying with Section 179 usually wins on tax; leasing wins on cash flow and on avoiding obsolescence. Price the financing itself with the Business Loan Calculator.
Timing a purchase around the tax year
Section 179 requires the equipment to be placed in service within the tax year. A December purchase can recover the deduction months earlier than a January one.
Financing equipment through an SBA facility
SBA terms run to ten years on equipment, materially lowering the payment. Compare with the SBA Loan Calculator.
Methodology & Editorial Standards
The loan is a standard amortising annuity over the equipment's financing term. The lease is modelled as financing the cost less the present value of the residual, discounted at the same rate, which is the economically correct construction for a fair-market-value lease and produces a payment below the loan. The lease total adds the residual buyout so both options are compared on the basis of ending with ownership. The Section 179 figure applies the business tax rate to the full cost, reflecting immediate expensing; annual dollar limits, phase-out thresholds above a spending cap, and the requirement for taxable income to absorb the deduction all apply in practice. Bonus depreciation, which has been phasing down, may apply instead or in addition. Maintenance, insurance and end-of-lease conditions are excluded. The engine implements the standard published formula for this calculation. Inputs are validated for domain and sign before evaluation, and any undefined case returns an em-dash rather than a spurious value.
Computation runs in IEEE-754 double precision at full internal precision; rounding to two decimal places occurs strictly at the display layer, so no cumulative drift enters the result. All monetary outputs use accounting presentation — grouped thousands, two decimals, negatives in parentheses — so figures can be transcribed directly into a model or working paper. Division-by-zero and out-of-domain inputs return an em-dash rather than a misleading number.
This engine was reconciled against an independent reference implementation and hand-verified for the worked example above before release. Our full five-stage review process is published on the About Us page.
Disclaimer. This calculator is provided for informational and modelling purposes only and does not constitute financial, tax, legal, medical, or engineering advice. Verify all figures with a qualified professional before acting on them.
Equipment Loan Calculator — 20 Expert FAQs
20 analyst-written answers to the questions practitioners actually ask — optimised for voice and answer-engine retrieval.
Should I lease or buy equipment?
Buying with Section 179 recovers $17,850.00 immediately at a 21% rate. Leasing saves $113.44 monthly but costs $1,693.76 more in total. Buy if you have taxable income to absorb the deduction.
What is Section 179?
A provision allowing immediate expensing of qualifying equipment rather than depreciating it over years. Expensing $85,000 at a 21% rate recovers $17,850.00 in the year of purchase.
Why is the lease payment lower?
Because you only finance the value consumed during the term. The 10% residual of $8,500.00 is discounted back and excluded from the financed amount.
Is a lease cheaper overall?
No. Lease plus buyout totals $106,943.65 against $105,249.89 for the loan. You are deferring the residual and paying interest on it in the meantime.
What is a $1 buyout lease?
A capital lease that transfers ownership for a nominal sum at the end. It is economically a loan and is usually treated as one for tax, so Section 179 generally applies.
What is an FMV lease?
A fair-market-value lease where you return the equipment or buy it at its then-market price. Payments are lower and generally deductible as an operating expense rather than expensed under Section 179.
Are there limits on Section 179?
Yes, an annual dollar cap and a phase-out once total equipment purchases exceed a spending threshold. You also need taxable income to absorb it — it cannot create a loss.
Can I finance used equipment?
Yes, and Section 179 applies to used equipment provided it is new to your business. Rates are typically one to two points higher than for new.
What term should I choose?
Match the term to the equipment's useful life. Financing a five-year asset over seven years means paying for equipment you have already replaced.
Does equipment financing require collateral?
The equipment itself usually secures the loan, which is why rates are lower than unsecured business borrowing. A personal guarantee is still common for smaller businesses.
Is bonus depreciation better than Section 179?
They interact. Bonus depreciation has no income limit but has been phasing down in percentage terms. Most businesses apply Section 179 first, then bonus depreciation to the remainder.
How does obsolescence affect the decision?
Heavily, for technology. Leasing transfers obsolescence risk to the lessor, which is worth real money for assets with short useful lives even when buying looks cheaper on paper.
Is this equipment loan calculator free to use?
Yes. It is free, requires no account, and has no usage limits. ApexConverter is funded by contextual advertising, never by selling user data.
Is my data sent to a server?
No. The engine runs as Vanilla JavaScript inside your browser under our Zero-Server Client-Side Execution model. Your figures are computed locally and are never transmitted, logged, or stored.
How accurate is this calculator?
It applies the standard closed-form formula in IEEE-754 double precision, rounding only at the display layer. The engine is reconciled against an independent reference implementation before release.
Does it work on mobile?
Yes. The interface is mobile-first with numeric keypad hints and is tested down to a 320-pixel viewport with no horizontal scrolling.
Can I use it offline?
Largely, yes. Because computation is client-side, the page continues to calculate without a network connection once it has loaded.
Which currency does it use?
Amounts display in US$ accounting format, but the underlying mathematics is currency-agnostic. The result is identical in any currency, so simply read the figures in your own.
Why does a result show an em-dash?
An em-dash indicates the calculation is not defined for the inputs given — typically a division by zero or a value outside the valid domain. We show a dash rather than a misleading number.
How do I report an error?
Email apexconverter.praxiscalc@gmail.com with the tool URL, your exact inputs, the output received and the output you expected. Verified mathematical errors are patched within 72 hours.