Thank you for visiting American River Bank. Please note this site is not fully compatible with screen readers.  We are available from 9am-5pm to assist via telephone at (800) 544-0545 or via email at clientservices@americanriverbank.com. We look forward to serving you.

Equipment Buy vs. Lease

Equipment Buy vs. Lease

Should you lease or buy? Use this calculator to find out! We calculate monthly payments and your total net cost. By comparing these amounts, you can determine which is the better value for you. KJE.BuyvsLeaseCalc=function(){this.MSG_ERROR1=KJE.parameters.get("MSG_ERROR1","Your loan term must be equal to or greater than the lease term.");this.MSG_ERROR2=KJE.parameters.get("MSG_ERROR2","Your down payment must be less than or equal to the total purchase price.");this.DS_NET=KJE.FloatArray(2);this.cats=["Net Cost to Buy","Net Cost to Lease"];this.sSchedule=new KJE.Repeating()};KJE.BuyvsLeaseCalc.prototype.clear=function(){this.TERM=0;this.SECURITY_DEPOSIT=0;this.OTHER_FEES_LEASE=0;this.CAR_PRICE=0;this.INTEREST_RATE=0;this.DOWN_PAYMENT=0;this.OTHER_FEES_BUY=0;this.SALES_TAX_RATE=0;this.RATE_OF_DEPRECIATION=0;this.INVESTMENT_ROR=0;this.LOAN_TERM=0;this.LEASE_INTEREST=0;this.RESIDUAL_PERCENT=0};KJE.BuyvsLeaseCalc.prototype.calculate=function(A){var d=KJE;var I=this.TERM;var g=this.SECURITY_DEPOSIT;var v=this.OTHER_FEES_LEASE;var u=this.CAR_PRICE;var c=this.INTEREST_RATE;var s=this.DOWN_PAYMENT;var e=this.OTHER_FEES_BUY;var b=this.SALES_TAX_RATE;var a=this.RATE_OF_DEPRECIATION;var y=this.INVESTMENT_ROR;var H=this.LOAN_TERM;var J=this.LEASE_INTEREST;var k=this.RESIDUAL_PERCENT;var B=I/12;if(H==0){H=I}if(I>H){throw (this.MSG_ERROR1)}var L=s+v;var o=(u*(k/100));var G=o*(J/1200);G+=KJE.PMT(J/1200,I,u-s-o);G*=(1+(b/100));var t=G*I;var r=L+t;var F=KJE.FV_AMT(y/100,B,g+L)-g-L;var z=F+r;var h=z/I;var w=u*(b/100);var C=u+w+e;if(s>C){throw (this.MSG_ERROR2)}var l=C-s;var x=u;for(var E=1;E<=B;E++){x=x*(1-a/100)}var i=KJE.PMT(c/1200,H,l);var m=0;var D=i*I;var K=KJE.FV_AMT(y/100,B,s+e)-s-e;var p=l;var f=KJE.ROR_MONTH(y/100);for(var E=1;E<=I;E++){p-=(i-((p*c)/1200));m=(i-G+m)*(f+1)}m-=(i-G)*I;K+=m;var j=D+s+K-x+p;var q=j/I;this.LOST_PAYMENT_INTEREST=m;this.TOTAL_UPFRONT_COSTS=L;this.TOTAL_LEASE_PAYMENTS=t;this.TOTAL_PAID_FOR_LEASE=r;this.LOST_INTEREST_ON_LEASE=F;this.NET_COST_OF_LEASE=z;this.AVERAGE_COST_PER_MONTH_LEASE=h;this.MARKET_VALUE_AT_END_OF_LOAN=x;this.SALES_TAX=w;this.TOTAL_PURCHASE_PRICE=C;this.LOAN_AMOUNT=l;this.LOAN_PAYMENT=i;this.TOTAL_PAYMENTS=D;this.LOST_INTEREST_ON_BUY=K;this.NET_COST_OF_PURCHASE=j;this.AVERAGE_COST_PER_MONTH_BUY=q;this.ENDING_LOAN_BALANCE=p;this.MONTHLY_PAYMENT=G;this.RESIDUAL_AMT=o;this.DS_NET[0]=j;this.DS_NET[1]=z};KJE.BuyvsLeaseCalc.prototype.formatReport=function(b){var c=KJE;var a=this.iDecimal;var d=b;d=KJE.replace("LEASE_INTEREST",c.percent(this.LEASE_INTEREST/100,2),d);d=KJE.replace("RESIDUAL_PERCENT",c.percent(this.RESIDUAL_PERCENT/100),d);d=KJE.replace("RESIDUAL_AMT",c.dollars(this.RESIDUAL_AMT,2),d);d=KJE.replace("ENDING_LOAN_BALANCE",c.dollars(this.ENDING_LOAN_BALANCE,2),d);d=KJE.replace("LOAN_TERM",c.number(this.LOAN_TERM),d);d=KJE.replace("LOST_INTEREST_ON_LEASE",c.dollars(this.LOST_INTEREST_ON_LEASE,2),d);d=KJE.replace("TERM",c.number(this.TERM),d);d=KJE.replace("MONTHLY_PAYMENT",c.dollars(this.MONTHLY_PAYMENT,2),d);d=KJE.replace("SECURITY_DEPOSIT",c.dollars(this.SECURITY_DEPOSIT,2),d);d=KJE.replace("OTHER_FEES_LEASE",c.dollars(this.OTHER_FEES_LEASE,2),d);d=KJE.replace("TOTAL_UPFRONT_COSTS",c.dollars(this.TOTAL_UPFRONT_COSTS,2),d);d=KJE.replace("TOTAL_LEASE_PAYMENTS",c.dollars(this.TOTAL_LEASE_PAYMENTS,2),d);d=KJE.replace("TOTAL_PAID_FOR_LEASE",c.dollars(this.TOTAL_PAID_FOR_LEASE,2),d);d=KJE.replace("NET_COST_OF_LEASE",c.dollars(this.NET_COST_OF_LEASE,2),d);d=KJE.replace("AVERAGE_COST_PER_MONTH_LEASE",c.dollars(this.AVERAGE_COST_PER_MONTH_LEASE,2),d);d=KJE.replace("CAR_PRICE",c.dollars(this.CAR_PRICE,2),d);d=KJE.replace("INTEREST_RATE",c.percent(this.INTEREST_RATE/100,2),d);d=KJE.replace("DOWN_PAYMENT",c.dollars(this.DOWN_PAYMENT,2),d);d=KJE.replace("OTHER_FEES_BUY",c.dollars(this.OTHER_FEES_BUY,2),d);d=KJE.replace("SALES_TAX_RATE",c.percent(this.SALES_TAX_RATE/100,2),d);d=KJE.replace("RATE_OF_DEPRECIATION",c.percent(this.RATE_OF_DEPRECIATION/100),d);d=KJE.replace("MARKET_VALUE_AT_END_OF_LOAN",c.dollars(this.MARKET_VALUE_AT_END_OF_LOAN,2),d);d=KJE.replace("SALES_TAX",c.dollars(this.SALES_TAX,2),d);d=KJE.replace("TOTAL_PURCHASE_PRICE",c.dollars(this.TOTAL_PURCHASE_PRICE,2),d);d=KJE.replace("LOAN_AMOUNT",c.dollars(this.LOAN_AMOUNT,2),d);d=KJE.replace("LOAN_PAYMENT",c.dollars(this.LOAN_PAYMENT,2),d);d=KJE.replace("TOTAL_PAYMENTS",c.dollars(this.TOTAL_PAYMENTS,2),d);d=KJE.replace("TOTAL_DOWN_PLUS_PAYMENTS",c.dollars(c.round(this.TOTAL_PAYMENTS,2)+this.DOWN_PAYMENT,2),d);d=KJE.replace("TOTAL_DOWN_LOST_INTEREST_PLUS_PAYMENTS",c.dollars(c.round(this.TOTAL_PAYMENTS,2)+this.DOWN_PAYMENT+c.round(this.LOST_INTEREST_ON_BUY,2),2),d);d=KJE.replace("LOST_INTEREST_ON_BUY",c.dollars(this.LOST_INTEREST_ON_BUY,2),d);d=KJE.replace("NET_COST_OF_PURCHASE",c.dollars(this.NET_COST_OF_PURCHASE,2),d);d=KJE.replace("AVERAGE_COST_PER_MONTH_BUY",c.dollars(this.AVERAGE_COST_PER_MONTH_BUY,2),d);d=KJE.replace("INVESTMENT_ROR",c.percent(this.INVESTMENT_ROR/100,2),d);d=KJE.replace("LOST_PAYMENT_INTEREST",c.dollars(this.LOST_PAYMENT_INTEREST),d);d=KJE.replace("LEASE_TOT_DOWN_PLUS_PAYMENTS",c.dollars(c.round(this.TOTAL_LEASE_PAYMENTS,2)+this.TOTAL_UPFRONT_COSTS,2),d);d=KJE.replace("LEASE_TOT_DOWN_LOST_INTEREST_PLUS_PAYMENTS",c.dollars(c.round(this.TOTAL_LEASE_PAYMENTS,2)+this.TOTAL_UPFRONT_COSTS+c.round(this.LOST_INTEREST_ON_LEASE,2),2),d);d=d.replace("**REPEATING GROUP**",this.sSchedule.getRepeat());this.sSchedule.clearRepeat();return d};KJE.CalculatorTitle="Buy or Lease?";KJE.parseInputs=function(a){return a};KJE.initialize=function(){KJE.CalcControl=new KJE.BuyvsLeaseCalc();KJE.GuiControl=new KJE.BuyvsLease(KJE.CalcControl)};KJE.BuyvsLease=function(n){var f=KJE;var c=KJE.gLegend;var i=KJE.inputs.items;KJE.PercentSlider("LEASE_INTEREST","Interest rate",0,20,2);KJE.PercentSlider("RESIDUAL_PERCENT","Residual percent",0,95,0);KJE.NumberSlider("TERM","Lease term in months",12,360,0);KJE.NumberSlider("LOAN_TERM","Loan term in months",12,360,0);KJE.DollarSlider("SECURITY_DEPOSIT","Security deposit",0,100000);KJE.DollarSlider("OTHER_FEES_LEASE","Other fees",0,50000);KJE.DollarSlider("CAR_PRICE","Purchase price",1000,10000000);KJE.PercentSlider("INTEREST_RATE","Interest rate",0,20,2);KJE.DollarSlider("DOWN_PAYMENT","Down payment",0,1000000);KJE.DollarSlider("OTHER_FEES_BUY","Other fees",0,100000);KJE.PercentSlider("SALES_TAX_RATE","Sales tax rate",0,30,2);KJE.PercentSlider("RATE_OF_DEPRECIATION","Annual depreciation",0,25,0);KJE.InvestRateSlider("INVESTMENT_ROR","Investment rate of return");KJE.Label("NET_COST_OF_LEASE","Net cost of lease",null,null,"KJEBold");KJE.Label("NET_COST_OF_PURCHASE","Net cost of buying",null,null,"KJEBold");var j=KJE.gNewGraph(KJE.gCATEGORIES,"GRAPH1",true,false,KJE.colorList[1],KJE.parameters.get("MSG_GRAPH_TITLE","Net Cost of Buying vs. Leasing"));j._legend.setVisible(false);j._legend._iOrientation=(c.TOP_RIGHT);j._showItemLabel=true;j._bPopDetail=true;var b=KJE.parameters.get("MSG_DROPPER_TITLE","Vehicle information:");var e=KJE.parameters.get("MSG_DROPPER_CLOSETITLE","Vehicle price of KJE2 with a KJE1 down payment.");var g=function(){return b+KJE.subText(KJE.getKJEReplaced(e,i.DOWN_PAYMENT.getFormatted(),i.CAR_PRICE.getFormatted(),i.SALES_TAX_RATE.getFormatted()),"KJECenter")};KJE.addDropper(new KJE.Dropper("INPUTS",true,b,g),KJE.colorList[0]);var o=KJE.parameters.get("MSG_DROPPER2_TITLE","Buy option:");var h=KJE.parameters.get("MSG_DROPPER2_CLOSETITLE","Payment KJE1");var m=function(){return o+"|"+KJE.subText(KJE.getKJEReplaced(h,f.dollars(n.LOAN_PAYMENT,2)),"KJERightBold")};KJE.addDropper(new KJE.Dropper("INPUTS2",false,m,m),KJE.colorList[0]);var a=KJE.parameters.get("MSG_DROPPER3_TITLE","Lease option:");var d=KJE.parameters.get("MSG_DROPPER3_CLOSETITLE","Payment KJE1");var k=function(){return a+"|"+KJE.subText(KJE.getKJEReplaced(d,f.dollars(n.MONTHLY_PAYMENT,2)),"KJERightBold")};KJE.addDropper(new KJE.Dropper("INPUTS3",false,k,k),KJE.colorList[0])};KJE.BuyvsLease.prototype.setValues=function(b){var a=KJE.inputs.items;b.TERM=a.TERM.getValue();b.SECURITY_DEPOSIT=a.SECURITY_DEPOSIT.getValue();b.OTHER_FEES_LEASE=a.OTHER_FEES_LEASE.getValue();b.CAR_PRICE=a.CAR_PRICE.getValue();b.INTEREST_RATE=a.INTEREST_RATE.getValue();b.DOWN_PAYMENT=a.DOWN_PAYMENT.getValue();b.OTHER_FEES_BUY=a.OTHER_FEES_BUY.getValue();b.SALES_TAX_RATE=a.SALES_TAX_RATE.getValue();b.RATE_OF_DEPRECIATION=a.RATE_OF_DEPRECIATION.getValue();b.INVESTMENT_ROR=a.INVESTMENT_ROR.getValue();b.LOAN_TERM=a.LOAN_TERM.getValue();b.LEASE_INTEREST=a.LEASE_INTEREST.getValue();b.RESIDUAL_PERCENT=a.RESIDUAL_PERCENT.getValue()};KJE.BuyvsLease.prototype.refresh=function(e){var d=KJE;var c=KJE.gLegend;var b=KJE.inputs.items;var a=KJE.gGraphs[0];a.removeAll();a.setGraphCategories(e.cats);a.add(new KJE.gGraphDataSeries(e.DS_NET,"Test",a.getColor(1)));a.paint();b.NET_COST_OF_LEASE.setText(d.dollars(e.NET_COST_OF_LEASE,2));b.NET_COST_OF_PURCHASE.setText(d.dollars(e.NET_COST_OF_PURCHASE,2))};KJE.InputScreenText="
Input information:
Input information:
Input information:
**GRAPH1** ";KJE.DefinitionText="
Purchase price
Total purchase price. Price should be after any manufacturer's rebate.
Down payment
Amount paid as a down payment, which for leases is often called a capital reduction.
Sales tax rate
Percentage sales tax to be charged on this purchase. Sales tax is included in each lease payment. Sales tax for buying is charged on the total sale amount.
Investment rate of return
Rate of return on investments. This is the return that you would make if you were to invest your down payment or security deposit instead of using it in your equipment purchase or lease.

**ROR_DEFINITION**

Loan term in months
Term in months for your equipment loan. Typically this is 36, 48, 60 or 72 months. If your loan term is longer than your lease term, we compare the buy vs lease options to the time the lease expires, and then use your remaining loan term to calculator you outstanding loan balance.
Loan interest rate
Annual interest rate for your loan.
Other fees
Any fee, other than a capital reduction or down payment, required to be paid at the time of purchase. This may include license, title transfer fees, etc.
Annual depreciation
The rate of depreciation gauges how fast your new equipment will lose its market value. A high depreciation rate is about 20% per year, medium is 15% per year and low is 10% per year.
Market value of equipment
Value of your equipment after the lease term is over.
Net cost of buying
This is the total cost of buying your equipment. This is calculated as:
  1. + Total up Front Costs (down payment + other fees)
  2. + Lost interest
  3. + Outstanding loan balance at time lease expires
  4. - Market value of equipment at time lease expires
  5. = Net cost of buying

The lost interest on your purchase includes any interest you would have earned at your investment rate of return on the buy option's down payment and other fees. If the monthly payment for leasing is less than the monthly payment for buying, this also includes any lost interest due to the higher monthly payments. If leasing is more expensive than buying, your interest costs for buying are reduced by the amount of interest you would earn on the difference.

Lease term in months
Term in months for your lease.
Lease interest rate
Annual interest rate for your lease.
Other fees
Any fee, other than a capital reduction or down payment, required to be paid at the close of the lease or loan.
Residual percent
For leases, this is remaining value after the lease term expires. The higher this amount, the lower your lease payment will be.
Security deposit
Refundable security deposit required at time of lease. We assume that the security deposit is fully refunded at the time the lease ends.
Net cost of lease
This is the total cost of leasing your equipment. This is calculated as:
  1. + Total up Front Costs (capital reduction + other fees)
  2. + Total Lease Payments
  3. + Lost Interest on Lease
  4. = Net cost of lease

The lost interest on your lease includes any interest you would have earned at your investment rate of return on the lease option's down payment, security deposit and other fees. Please see the definition for 'Net cost of buying' for an explanation on how we account for any interest you might earn by having a lower monthly lease payment.

";KJE.ReportText='

Your lease payment would be MONTHLY_PAYMENT compared with a LOAN_PAYMENT loan payment.

Your lease payment would be MONTHLY_PAYMENT compared with a LOAN_PAYMENT loan payment. This is based on a price of CAR_PRICE and a TERM month lease vs. a LOAN_TERM month loan. Details of your cost of leasing and cost of buying are shown below:
Buy Lease
Price CAR_PRICE Price CAR_PRICE
Interest rate INTEREST_RATE Interest rate LEASE_INTEREST
Down payment DOWN_PAYMENT Down payment DOWN_PAYMENT
Other fees buy OTHER_FEES_BUY Other fees lease OTHER_FEES_LEASE
Rate of depreciation RATE_OF_DEPRECIATION Residual percent RESIDUAL_PERCENT
Sales tax SALES_TAX Security deposit SECURITY_DEPOSIT
Loan amount LOAN_AMOUNT    
Loan payment LOAN_PAYMENT Lease payment MONTHLY_PAYMENT

Total net cost of Buying and Leasing

The total cost of buying would be NET_COST_OF_PURCHASE vs. NET_COST_OF_LEASE for a lease. Please see the table below for a summary of how this was calculated. **GRAPH**
Net cost of buying Net cost of leasing
Total loan payments + TOTAL_PAYMENTS Total lease payments + TOTAL_LEASE_PAYMENTS
Lost interest on buy option + LOST_INTEREST_ON_BUY Lost interest on up front costs + LOST_INTEREST_ON_LEASE
Down payment + DOWN_PAYMENT Up front costs + TOTAL_UPFRONT_COSTS
Ending loan balance + ENDING_LOAN_BALANCE    
Market value after TERM months* - MARKET_VALUE_AT_END_OF_LOAN    
Net cost of purchase = NET_COST_OF_PURCHASE Net cost of lease = NET_COST_OF_LEASE

*We assume that you sell your equipment at the estimated market value at the end of the lease term.

';


Information and interactive calculators are made available to you as self-help tools for your independent use and are not intended to provide investment advice. We cannot and do not guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.