# Equipment lease or buy calculator

**Short answer:** For $80,000 of equipment, compare a 60-month loan at 13.00% with a $1,850 lease. Cheaper at today's value: Buying, by $6,380. Both are discounted at the loan rate. SBA's term limit is in SOP 50 10 8.1, App. 17, Para. A.2.

Canonical page: https://www.sbaexpress.loans/tools/equipment-lease-or-buy/
Last checked: 2026-11-09

## How this is computed

We convert both options to today's value, using the loan rate as the discount rate. That asks a plain question: if you can borrow at this rate, which option costs less?

```
v = (1 + r)^-months, r = loan rate / 12
buying  = price - resale x v
leasing = lease x annuity due + (buyout - resale) x v   if you buy it at the end
leasing = lease x annuity due                           if you return it
```

The loan's payments are worth exactly the amount borrowed when you discount them at the loan rate. So the loan term changes the monthly payment, not the result at today's value.

Lease payments are treated as due at the start of each month, because a lease often collects the first payment at signing. A lease billed at month end costs slightly less.

The implied rate is the yearly rate at which the lease payments and the end value equal the equipment price. It uses the actuarial method in [Regulation Z, Appendix J](https://www.consumerfinance.gov/rules-policy/regulations/1026/j/), with a month as the period.

## A worked example

Take $80,000 of equipment. A loan needs $8,000 down and finances $72,000 over 60 months at SBA's maximum rate for that size, 13.00% today. The lease costs $1,850 a month for 60 months, with a $8,000 buyout. The equipment is worth $16,000 when the lease ends. These figures are an illustration, not a quote.

The lease implies a rate of 16.39% on the equipment. The loan is at 13.00%. The lower rate is the cheaper money.

**$80,000 of equipment over 60 months**

| Item | Amount |
| --- | --- |
| Loan payment, monthly | $1,638.22 |
| Lease payment, monthly | $1,850.00 |
| Buying, at today's value | $71,618 |
| Leasing, at today's value | $77,998 |
| Rate the lease implies | 16.39% |
| Cheaper at today's value | Buying, by $6,380 |

What this leaves out

Taxes, insurance and maintenance. An owner can generally depreciate equipment. An owner may also be able to deduct the cost in the year it is placed in service under section 179. A lessee generally cannot depreciate leased property ([IRS Publication 946](https://www.irs.gov/publications/p946)). Ask your tax preparer which applies to you.

## Common questions

### Which is cheaper, leasing or buying?

It depends on the rate the lease implies, your loan rate and what the equipment is worth at the end. This tool shows all three.

### What if I return the equipment at lease end?

Enter 0 for the buyout. You then own nothing at the end, so the buying side gets credit for the resale value.

### How long can an SBA loan run on equipment?

SBA's maximum for equipment is 10 years, or up to 15 years if the IRS asset class useful life supports it. The rule is SOP 50 10 8.1, App. 17, Para. A.2. A lender can set a shorter term. [Read the term rule](https://www.sbaexpress.loans/answers/sba-equipment-loan-term/).

## Put this calculator on your site

Paste this code into any page. It shows the calculator in a frame with no site header. Replace YOUR-NAME with a short name for your organization. The name travels with any visitor who moves to the next step. The height fits a laptop column. On a phone the frame scrolls inside itself, so raise the height if your page is narrow.

```
<iframe src="https://www.sbaexpress.loans/embed/equipment-lease-or-buy/?partner=YOUR-NAME" title="Equipment lease or buy calculator" width="100%" height="1120" style="border:0" loading="lazy" allow="clipboard-write"></iframe>
<p><a href="https://www.sbaexpress.loans/tools/equipment-lease-or-buy/">Equipment lease or buy calculator</a> from SBA Express Loans</p>
```

## Sources

- [13 CFR 120.214, variable interest rates](https://www.ecfr.gov/current/title-13/section-120.214)
- [SOP 50 10 8.1, App. 17, Para. A.2](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)
- [WSJ Prime Rate, Federal Reserve series DPRIME via FRED](https://fred.stlouisfed.org/series/DPRIME)
- [Regulation Z, Appendix J, annual percentage rate computations (read November 9, 2026)](https://www.consumerfinance.gov/rules-policy/regulations/1026/j/)
- [IRS Publication 946, How To Depreciate Property (read November 9, 2026)](https://www.irs.gov/publications/p946)