Snowvale Business Capital, a small-business funding broker in Greeley, Colorado, offers a free equipment loan calculator. It computes the monthly payment, total interest and total cost of an equipment loan from figures in a real quote; the page then shows how to add up a lease quote by hand and set the two totals side by side. Results are arithmetic only, not offers.
How to use the calculator
| Box | Where to find it |
|---|---|
| Equipment price | The vendor quote or invoice, including any delivery or installation you plan to finance |
| Down payment | The amount the loan quote asks you to pay up front; leave blank if none |
| Interest rate | The annual note rate stated in the loan quote |
| Term | The number of monthly payments in the loan quote |
The calculator assumes equal monthly payments with interest on the declining balance. It shows the estimated monthly payment, the total interest, and the total cost including the down payment.
Working out the lease side
The calculator handles the loan. For the lease, take three figures from the lease quote and add them up by hand:
- the monthly lease payment multiplied by the number of payments;
- any deposit or advance payment you will not get back;
- the end-of-term purchase price, if you intend to keep the equipment.
Now compare the two totals. If you plan to keep the equipment, compare the loan's total cost with the lease total including the buyout. If you plan to return it, subtract what the equipment would still be worth from the loan's total before comparing, because with a loan you keep that value.
A comparison in letters, not numbers
Suppose a loan quote gives a total cost of L, the equipment would be worth R when you are done with it, and a lease quote totals S without the buyout. If you will return the equipment, compare L minus R with S. If you will keep it, compare L with S plus the buyout. Whichever is smaller costs less over the period, before taxes and the soft costs listed below.
What the result leaves out
- fees in either quote, such as documentation or origination charges;
- insurance and maintenance, which most loans and leases require you to pay;
- tax effects, which differ between loans and leases; ask your accountant;
- how long you will actually use the equipment, which often decides the answer.
Before you choose
Read the end-of-term clause on any lease and the prepayment terms on any loan. Our guide to equipment loans, leases and credit lines explains when each structure fits, and equipment financing explains how we handle requests. Lending partners set actual rates and terms.
By Snowvale Business Capital · Updated