Equipment Lease Calculator

Cody Cromwell
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How the Equipment Leasing Calculator Works

This Equipment Leasing Calculator can be used to estimate the value of your leased equipment.

Although leased equipment losses can vary depending on the company you work for, your individual situation, and the condition of your leased equipment, you should get a ballpark estimate.

Leasing vs. Buying

The four main differences between leasing and buying equipment are as follows:

Loss Restoration

While only leasing companies may be able to help in the event of a truly catastrophic loss, many leasing companies will attempt to replace your equipment with another similar piece of equipment rather than simply recouping your previous investment.

This can result in a loss of investment value since you will lose out on any depreciation that your purchased equipment may have already accrued during the lease term.

Liability

Leasing companies are responsible to protect your business assets. While they may offer insurance against damage to the leased equipment, it is your responsibility to buy insurance to protect your personal assets. These include your restaurant, home and personal property.

Full or Partial Recall

If your leased equipment fails under lease and does not produce a saleable product, the leasing company may attempt to recall your equipment. Alternatively, they may simply return the equipment back to you.

This may cause you to have to completely replace the leased equipment or, in the worst case scenario, you may need to take on the cost of replacing it yourself.

Typical Equipment Lease Rates, Terms & Costs

Equipment Lease Rates & Terms

  • The Equipment Lease Rate is for illustrative purposes. Your lease rate will vary depending on the type of equipment you choose and the location you are leasing.
  • Lease terms and equipment availability will vary by location and lease term. In some instances, a business may be willing to work with you to extend your lease for a monthly rate.
  • To help cover maintenance costs, lease fees are assessed on a sliding scale based on the age and condition of the equipment.

If you are someone who wants to lease equipment for a long period of time and use it often, leasing equipment is a great way to get what you need without having to come up with the upfront cash out of pocket. With lease payments, you can play as often as you want and have less financial effects than if you owned the equipment outright.

Since the time it takes to acquire a lease agreement will vary by location and lease term, it is important to first evaluate your needs and then get in touch with local equipment dealers. Vendors and equipment suppliers that are interested in renting equipment will be able to offer a lease, priced based on the type and amount of equipment you need.

Equipment Lease Calculator Inputs

The equipment lease calculator is essentially an Excel spreadsheet that you can use to calculate your equipment costs, equipment payments and future returns. Using an Equipment Lease Calculator provides insight into some key metrics that can be used when making decisions, negotiating with your landlord and prioritizing your savings.

The spreadsheet is made up of inputs and returns columns. Inputs are for the term, lease rate and property location. By using the equipment lease calculator, you can provide the remaining values to determine the equipment lease payments.

The returns values are used to determine the equipment lease return, which can be used to establish the equipment lease payments at any future point in time.

Unlike the basic equipment lease calculator, this one allows you to set your own lease terms and uses a lease rate rather than an interest rate.

Lease Rate

Lease rates are used to compute the benefits and takeaways of a leasing agreement so you can get a better idea of the incentive to lease. By taking into account the lease rate, you can determine the leasing agreement’s benefit or incentive.

Most equipment leases will take the form of a net lease. To compute the lease payments, you’ll need to calculate the lease rate.

Equipment Lease Calculator Outputs

The Equipment Lease Calculator helped you identify how much leasing equipment costs based on: total equipment cost, total lease length, monthly lease payment, residual value, and down payment.

The calculator also helps you compare leasing costs between leasing or buying.

Here are the input requirements and corresponding output listed below the calculation:

{1}. The total cost of equipment consists of the base cost, added equipment cost, and a cushion of 5%.
{2}. The total lease term is the number of months you are willing to lease the equipment or the number of months you plan to own the equipment.
{3}. The monthly lease is the amount of money you will be paying for the total lease term. You can then multiply this by the total months to get the total lease amount.
{4}. The Residual Value is the amount of money your equipment is worth when you no longer need it.
{5}. The Down Payment is the amount of money you will otherwise pay to lease the equipment.
{6}. The Lease Rate is what you pay in terms of down payment per month. This is 1/12 of the total lease amount per month.
{7}. The Lease Length is how many years you plan to lease the equipment. This is calculated by totaling the lease period minus the down payment period. If you plan to own the equipment after the lease period has ended, add one to this value.

Underestimating the Cost of an Equipment Operating Lease

Most people are familiar with shopping for a new vehicle and how the dealer lot has a variety of makes, models, and colors. But few realize that there’s another place to rent or buy auto related items – the vehicle leasing market.

Most people don’t realize that you can lease a printer or copier. However, leasing these devices is becoming the standard process for businesses and home owners. When you hire a printer or copier, you are renting the printer or copier, just like a car or truck.

In some instances you’re leasing the equipment outright. In others, you’re leasing the equipment for a predetermined amount of time for a fixed fee. Only in rare situations is the price for leasing an item negotiable. Also, the leasing fee varies from company to company and will play a large role in determining the decision whether or not to lease.

The decision to lease or buy the equipment usually depends on many variables, such as the value of the equipment and how long you will use it for. Another major determinant of whether or not you lease the equipment is if you plan to continue using the equipment in the future.

With equipment leases in mind, here are some questions to ask before you obtain the equipment.

Three Types of Equipment Leases

The first step to determining your equipment lease payments is to identify the different types of lease available.

When you use PayPal for your Equipment financing, PayPal recommends the following lease options: A Standard 3-Year Equipment Lease. This lease accommodates most customers. It is the most popular option and easiest to estimate. A Deferred Equipment Lease. This lease option also accommodates most customers … but it is more complicated to calculate. A Customized Equipment Lease. This is the most expensive option, but it is only recommended for customers who are doing this type of lease for the first time.

Here are the details for each of these options:

A Standard 3-Year Equipment Lease can be used for any product. Payments are made for the total of the purchase price, the sales tax and the sales tax markup.

A deferred lease is calculated based on the total of the purchase price, sales tax and the sales tax markup. The 3-year term begins after 2 years.

A customized lease is different for different types of products. The calculations vary according to the type of payment plan when you use PayPal. So be sure to select one of the options listed above. If you’re interested in using PayPal for your Equipment financing, you’ll need to enroll in PayPal’s standard Equipment financing.

$1 Buyout Lease

How long do you want to lease your equipment?

What is the best way to compare lease rates?

How do you get a tax deduction for leasing equipment?

If you ever have questions like these, your equipment leasing calculator is where it’s at. The most common lease calculators deal with determining how much capital you should pay for a piece of equipment. But beyond that, you’ll also need to know the terms and conditions for leasing equipment.

The Equipment Buyout Calculator is a great tool for figuring out when you’ll break even on your equipment. It’s ideal for equipment leasing where the costs and tax benefits can vary from one type of equipment to another. You also get the ability to input your own information and see the results with ease. This is great for owners who are unsure of what type of equipment they should get or want to break even.

Since the Equipment Buyout Calculator is all about calculations, it's not the right tool for describing the benefits of equipment leasing. The Buyout Calculator is also great for figuring out the right lease terms for your business and what you need to get the most out of your leasing experience. So whether you’re still building your company or want to take the next step, make sure to check out the Equipment Buyout Calculator.

10% Option Lease

Fair Market Value Lease

Service Rental offers fair market value (FMV) lease pricing for most equipment types. FMV lease pricing is a commonly used industry standard method of setting up small business equipment leases.

A lease is a method of subsidizing equipment costs through a monthly fee. In this lease agreement, the leasing company agrees to pay the monthly lease fee and the equipment owner agrees to allow the leasing company to use the equipment for the stated period of time. This lease accounting method can be used to account for multiple notes payable.

Although there are many different types of equipment, each equipment asset should be valued based on its fair market value (FMV), derived using the following formula:

FMV = NCA value + Value Added Residual (VAR)

The FMV of an equipment asset is capitalized to the asset balance, and the FMV of accrued expenses is expensed as incurred.

Where ‘ NCA‘ accounts for net buyer‘seller adjustments and ‘ VAR‘ represents the market contribution of the equipment.

Equipment Leasing Examples

Equipment Lease Cost Examples

Leasing paintball equipment is the second fastest growing segment of the equipment industry after firearms. Equipment leasing has few, if any, program costs, is a great way to get on the equipment you need to keep customers coming in, and is very profitable long-term.

Leasing equipment has a lot of benefits and few drawbacks when compared to buying equipment outright, so let’s take a look at some of the benefits and how they can help you build a stronger equipment business.

You can get on and use the equipment you need. As a startup it can be very difficult to maintain inventory of the equipment you need to keep your business up and running. There are also the unexpected costs of replacing worn out equipment and replenishing your safety kits. Also it can be very expensive if you get stuck with an overstocked inventory of your equipment. This is why leasing is a great way to get started with the equipment you need. By leasing equipment, you can get started on the equipment you need without the big start up capital needed to get into a new industry.

Equipment Lease Qualifications

Unless you’re in the construction business or running a local business where physical assets are either built or purchased on a contract basis (i.e. plumbing, HVAC, etc.), you don’t need to consider equipment leasing as part of your business plan. Equipment leasing is a risky proposition for most new start-up businesses and is probably not the best choice for an established business either.

Some Leases Require a Company to Maintain the Equipment and Perform Maintenance

Some leases contain an operating clause in which the lease can be cancelled if the equipment is not operational.

Some Leases Allow a Business Owner to Assign a Guaranteed Payment or Make Payments in Installments to a Leasing Company

Keep in mind that leasing is a long term commitment and if equipment is not kept in top-notch condition, it can pose a great risk to operational efficiency.

What Types of Equipment Can You Lease?

Business equipment requirements can vary quite a bit based on industry, location, and rising costs of replacement equipment. While some equipment can be bought on a long-term contract, others require a shorter term.

Depending on your specific requirements, you may want to lease equipment:

  • Purchased on a long-term lease
  • Purchased on short-term lease
  • Leased and bought (to be later sold)
  • Leased and sold (to be later bought)

We’ll explore each of these options here.

Purchasing and Leasing Equipment

Purchasing equipment is not a viable option for businesses that require quick turnarounds. Equipment costs might be higher when purchasing, and you could be stuck paying off large non-negotiable purchases for years.

For businesses like these, leasing is a better choice since you can get the equipment you need more quickly. Instead of waiting for the equipment to arrive on your doorstep, you’re able to get what you need more quickly.

The other advantage of leasing equipment is that you are able to quickly sell or trade your equipment when you need to. You could lease equipment for a few days, use it for your business for a few weeks and sell the equipment when you’re done.

Equipment Lease vs Equipment Loan

If you are interested in leasing out equipment instead of buying it, you may end up approaching either a lease or a loan company to rent your tools and equipment. If you have your own equipment financing, that could be the way to go as a lease company may be hesitant to provide financing to you. But if you prefer to handle the financing yourself, you may pursue a lease (instead of a loan).

Aspects to Consider when Selecting an Equipment Leasing Company

There are many companies that lend or lease out tools and equipment, and finding the right one for you can save you money and time. But the most important decision to make is who gets the equipment at the end of the lease period.

Learn how you can save even more by lowering your cost of operation by offsetting utilities, service contracts, repairs and other costs expected in an average operating month.

Pre-Owned and New Equipment Supply Chains

Some leases feature the option to purchase leased equipment at the end of the lease period. This feature is very beneficial because it allows businesses, construction crews and other organizations to substitute leased equipment for an off-lease unit, or purchase it outright.

If you are purchasing a piece of equipment, you can choose whatever brand you want and benefit from the research and service that went into it. If you are leasing, you may have to look into an equipment supply chain with equipment that is close to a variety of different brands.

Bottom Line

We all need tools! For most of our career, we are using some basic equipment regularly.

If we are in construction industry, we generally need electrical stuff like circuit breakers, lighting, electrical wire covers, connectors, rubber parts, etc.

If we are in manufacturing or maintenance industry, we mainly require mechanical equipment like CNC Machines, Milling Machines, Hydraulic Press, Router, and milling cutter, etc.

We are in IT, we need Information Technology products, such as laptops, desktops, printers, and scanners.

We are just beginning our career in a new field and do not have the huge budget, but we have some tools that we think are essential now. We can go to a local power tools store or some online shop to purchase.

Before purchasing, some basic questions pop up in our mind.

· How much will I pay per month?

· How much will my monthly payment be?

· What is the total consideration for purchasing?

· Can I afford the payments?

· If I need to upgrade it, whether it is cheap for upgrading?

Period when the deal ends, is that the same period when you are renting it off and paying off that lease?

And quite importantly, do I need to re-buy the next time I go for upgrade?