Equipment Financing Calculator
Loan vs. lease, Section 179 baked in.
Switch between a straight loan and a lease (capital or FMV residual). We compute monthly payment, tax deduction under Section 179, and total cost over the term so you can pick the cheaper option.
| Mo | Payment | Principal / Dep. | Interest / Rent | Balance |
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Loan vs. Lease — The Real Difference
A loan finances ownership: you build equity in the equipment and own it free-and-clear at the end. A lease finances usage: you rent the equipment, return it (or buy it for FMV) at the end, and own nothing unless you exercise the buyout.
Section 179 — Depreciation You Can Use
Under IRC §179 (2024 limits), you can deduct up to $1,160,000 of qualifying equipment in the year you put it into service. Above that limit, bonus depreciation (60% in 2024, phasing down) applies to the excess. Both apply only to purchased equipment — leased equipment can be expensed differently:
- Capital lease ($1 buyout): Treated like a purchase for tax purposes. Section 179 applies.
- FMV (operating) lease: Each monthly payment is a deductible business expense. No Section 179, but the deduction is spread evenly.
Money Factor and How Lease Rates Are Quoted
Lease companies quote a money factor instead of an APR. The conversion: APR = money factor × 2400. So a 0.0035 money factor = 8.4% APR. This calculator accepts either the APR or the money factor times 2400. We compute monthly payment as depreciation (price − residual / months) plus rent charge ((price + residual) × money factor).
Worked Example: $85,000 Construction Equipment
- Loan, 9.5%, 60 mo: Monthly $1,613, total $96,800, full $85k Section 179 deduction year one (~$17,850 tax savings at 21%). Net cost ~$79,000.
- FMV lease, 9.5%, 60 mo, 10% residual: Monthly $1,409, total $84,540 + $8,500 buyout. No Section 179 but every $1,409 is a deductible expense. Net cost ~$73,000 if you walk away, ~$81,500 if you buy.
The lease wins on cash flow but loses on equity. Pick the loan if you'll use the equipment for 7+ years; pick the lease for 3–5 year tools that obsolete quickly.