Should I buy or lease my next big piece of equipment?
Short answer
Buy what holds its value and you'll run for years past the loan term. Lease what changes fast, gets used seasonally, or you'd want to upgrade in three years anyway.
The real question is how long you'll actually use it, not the price tag
Equipment that holds resale value and that you'll run for eight or ten years is usually cheaper bought outright or financed, because a lease is effectively renting with a markup built in for the leasing company's risk. The math tilts hard toward buying the longer your realistic use period is.
Equipment that depreciates fast, gets outdated by newer models quickly, or that you'd honestly want to replace in three years anyway tilts toward leasing, because you're paying for the use without holding the risk of resale value at the end.
Run the actual numbers, not the gut feel
Compare total cost over your realistic use period: purchase price plus financing interest plus maintenance, minus expected resale value at the end, against total lease payments over the same period. Whichever total is lower for your actual use horizon wins, full stop.
Don't let a lease's lower monthly payment fool you into ignoring the total cost. Leases are structured to look cheap month to month and often cost more over the full period you'd have used the equipment anyway.
Cash flow and tax treatment matter too, so loop in your CPA
If cash is tight right now and the equipment generates revenue immediately, a lease's lower upfront cost can be the right call even if buying is cheaper long-term, because a business that runs out of cash doesn't get to enjoy the long-term savings. Depreciation and Section 179 treatment differ between buying and leasing and can meaningfully shift which option actually wins after tax.
Buy vs lease, five-year comparison example
| Purchase price | $85,000 |
|---|---|
| Financed over 5 yrs, total with interest | $97,000 |
| Estimated resale value at year 5 | -$25,000 |
| Net cost if bought | $72,000 |
| Lease payments over 5 yrs (no resale) | $88,000 |
| Verdict for this use caseyou'd use it the full 5+ years and it holds decent resale value | Buy |
The math: Net cost = total purchase/financing cost minus expected resale value at the end of your realistic use period. Compare that directly to total lease cost over the same period.
Where owners get this wrong
- Choosing based on the lower monthly payment without comparing total cost.
- Buying fast-depreciating equipment you'll want to replace in three years anyway.
- Not looping in your CPA on the tax treatment before signing either kind of agreement.
Worth knowing: Depreciation rules, Section 179 limits, and lease accounting treatment change and depend on your specific situation. Confirm the tax angle with your CPA before deciding.
Ask your version of this question
This is one business owner-tested take. Your shop size, trade, and team change the answer. Ask the exact version inside Ask a Shop Owner and get a response grounded in how owners like you actually handled it.
Now run it against your numbers.
This answer is written for shops in general. Inside Ask a Shop Owner it becomes your answer: your revenue, your crew, your market, your history. Ask "Should I buy or lease my next big piece of equipment" and get the version that accounts for what you already told us.
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