Lease vs Buy Equipment
Compare leasing and buying with one time horizon, financing cost, maintenance, tax assumptions, residual value, utilization, and exit flexibility.
Ownership and access have different cash shapes
Buying concentrates cost and preserves an asset. Leasing spreads payments and may include service, but adds term, usage, and return conditions. Compare cash flows and risk over the same operating period.
Example: three-year production equipment
Buying leads at full utilization and expected resale. Leasing leads if demand falls after year one because exit exposure is capped. The demand range, not the lowest monthly payment, drives the decision.
Build a shared-horizon model
- Set the expected use period.
- List payments, fees, service, and financing.
- Estimate resale with a range.
- Test low utilization and early exit.
Tax treatment varies
Depreciation, deductions, and lease classification depend on jurisdiction and circumstances. Verify them with a qualified adviser.
The decision rule
What to record before acting
Compare total cash and exit exposure over the same use horizon before choosing ownership or access.
Apply the rule in context with test low and high utilization. Keep the evidence and assumptions with the decision so an outcome review can distinguish reasoning from luck.
Continue within money and purchase decisions
Is an Extended Warranty Worth It?
Evaluate an extended warranty through covered failure probability, repair cost, exclusions, overlap, claim friction, and your capacity to absorb loss.
Is an Extended Warranty Worth It?Cash vs Financing a Purchase
Compare cash and financing through total borrowing cost, cash reserves, alternative use of funds, payment risk, and contract flexibility.
Cash vs Financing a Purchase