Equipment Lease Calculator
Calculate lease payments using factor rates, residual values, and compare end-of-lease options. Get instant equipment leasing numbers to make informed decisions.
Common Equipment Lease Examples
See typical equipment leasing scenarios with factor rates, residual values, and monthly payments. These examples show what businesses commonly lease and the costs you can expect.
| Equipment Type | Equipment Value | Factor Rate | Term | Residual Value | Monthly Payment | Total Payments |
|---|---|---|---|---|---|---|
Office Equipment Copiers, phone systems, computers | $30,000 | 2.50% | 3 years | $9,000 | $750 | $27,000 |
Medical Equipment Diagnostic machines, dental equipment | $80,000 | 2.00% | 4 years | $24,000 | $1,600 | $76,800 |
Construction Equipment Excavators, skid steers, loaders | $120,000 | 3.00% | 5 years | $30,000 | $3,600 | $216,000 |
Manufacturing Machinery CNC machines, production equipment | $200,000 | 2.20% | 5 years | $50,000 | $4,400 | $264,000 |
Restaurant Equipment Commercial ovens, refrigeration, POS systems | $45,000 | 3.50% | 3 years | $9,000 | $1,575 | $56,700 |
Factor Rate Guide
Equipment lease factor rates typically range:
- Technology equipment: 1.5-3.0% (0.015-0.030) due to rapid depreciation
- Medical equipment: 2.0-2.5% (0.020-0.025) for specialized devices
- Construction equipment: 2.5-3.5% (0.025-0.035) for heavy machinery
- Manufacturing equipment: 2.0-3.0% (0.020-0.030) depending on complexity
Lease Benefits
Why businesses choose equipment leasing:
- Lower monthly payments: Typically 20-30% less than loan payments
- Tax advantages: Lease payments are typically 100% tax deductible
- Technology updates: Easier to upgrade to newer equipment
- Preserve cash flow: Keep working capital for operations
Equipment Lease Calculator
Calculate lease payments using factor rates, residual values, and end-of-lease options.
Lease Results
How Equipment Leasing Works
Understanding factor rates, residual values, and your end-of-lease options.
Key Lease Terms
- • Factor Rate: The lease cost per dollar of equipment value (typically 0.015-0.040)
- • Residual Value: Estimated equipment value at lease end (affects payments)
- • Lease Term: Length of the lease agreement (usually 24-60 months)
- • End-of-Lease Options: Return, purchase, or extend your lease
Lease Payment Components
- • Depreciation: Equipment cost minus residual value
- • Finance Charge: Interest on the total equipment value
- • Monthly Payment: Depreciation + finance charge divided by term
- • Total Cost: All payments plus purchase option (if exercised)
Understanding Factor Rates
When to Consider Leasing
Leasing Advantages
- • Lower monthly payments
- • Preserve working capital
- • Potential tax benefits
- • Easy equipment upgrades
- • Maintenance may be included
- • Off-balance-sheet financing
Buying Advantages
- • Own the equipment
- • Build equity over time
- • Depreciation tax benefits
- • No mileage/usage restrictions
- • Lower total cost long-term
- • Can sell anytime
End-of-Lease Options
Return Equipment
Return the equipment to the lessor with no additional cost (subject to normal wear and tear).
Purchase Equipment
Buy the equipment for the pre-determined residual value set at lease signing.
Extend Lease
Continue leasing at fair market value rates (typically month-to-month).
Frequently Asked Questions
What's a typical factor rate for equipment leasing?
Factor rates typically range from 0.015 to 0.040, depending on credit quality, equipment type, and lease term. A 0.025 factor rate is roughly equivalent to 6% APR financing.
How is residual value determined?
Residual value is the estimated worth of equipment at lease end, typically 15-50% of original cost. It's based on equipment type, useful life, and market demand. Higher residual = lower payments.
Can I pay off a lease early?
Most leases can be paid off early, but there may be penalties or fees. You'll typically pay the remaining payments plus the residual value, minus any early payoff discounts.
What happens if I damage the equipment?
You're responsible for maintaining the equipment and any damage beyond normal wear and tear. Most lessors require insurance coverage. Review the lease agreement for specific terms.
In-Depth Guide: Equipment Leasing
Understand factor rates, residual values, and how to compare leases against loans.
Choosing a Lease Structure
- FMV (Fair Market Value): lower payments, option to purchase at market price
- $1 Buyout: higher payments, but ownership transfer at end for $1
- 10% Purchase Option: middle ground between FMV and $1 buyout
Factors that Impact Factor Rates
- Credit profile and time in business
- Equipment age and resale value volatility
- Lease term and residual assumptions
When Leasing Makes Sense
- Rapidly evolving technology and frequent upgrades
- Need to preserve working capital
- Desire for lower monthly payments vs total cost