When looking to purchase equipment, the lower monthly cost of a lease may be enticing, but what is that lease truly costing you and your business when compared to a loan? Below you have a calculator which can help you determine just that.
Purchase Price is the amount you are paying for the equipment without any taxes. The base price of the actual equipment.
Down Payment is the amount you will put pay out of pocket to complete the transaction.
Sales Tax Rate is the tax you will pay based on the state you live in. For Virginia, you have personal property taxes annually on the purchase versus sales tax.
Loan Terms in Months is the term of the loan in months.
Interest Rate is the percentage your finance company will charge
Other Fees include a maintenance service plan, application fee, or any other amount that will be financed.
Lease in Terms of Months is the lease term in months or number of payments
Interest rate is the annual interest rate for your lease. You can back into this amount if they don’t have it using a payment calculator found here.
Other fees are any fee, other than a capital reduction or down payment, required to be paid at the close of the lease.
Residual percent for leases is the remaining value after the lease term expires stated in a percentage of purchase price. The higher this amount, the lower your lease payment will be.
Security deposit assumes a full refund of the security deposit at the lease end.
There are two other things to take into consideration, and that is the cost of if you would have invested the money and depreciation of the equipment. These have tax ramifications and we suggest you consult your tax adviser or engage Home Time Business Services for further advise.
In conclusion, individual results may vary when doing this calculation. However, the more informed you are when making a decision the smarter the decision will be. What did your results show? Should you lease or buy your next piece of equipment?