1. What is Equipment Lease To Own?

Equipment Lease To Own is a financing arrangement where you lease equipment with the option to purchase it at the end of the lease term. This allows businesses to acquire necessary equipment while spreading payments over time.

2. How Does the Calculator Work?

The calculator uses the lease to own formula:

Where:

• \( Equipment\ Cost \) — Total cost of the equipment
• \( Residual \) — Estimated value at end of lease term
• \( Term \) — Lease duration in months
• \( Interest \) — Annual interest rate percentage

Explanation: The formula calculates the monthly payment by spreading the depreciation cost over the lease term and adding the monthly interest charge.

3. Benefits of Lease To Own

Details: Lease to own arrangements provide businesses with access to equipment without large upfront costs, preserve capital, offer tax benefits, and provide flexibility at the end of the lease term.

4. Using the Calculator

Tips: Enter the total equipment cost, estimated residual value, lease term in months, and annual interest rate. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is residual value?
A: Residual value is the estimated worth of the equipment at the end of the lease term, which affects your monthly payments.

Q2: Can I purchase the equipment before the lease ends?
A: Most lease to own agreements include early purchase options, but terms and costs may vary by agreement.

Q3: Are maintenance costs included?
A: Maintenance costs are typically separate from the lease payment unless specified in the agreement.

Q4: What happens if the equipment is damaged?
A: Lease agreements usually include provisions for damage repair or replacement, but terms vary by contract.

Q5: Is lease to own better than outright purchase?
A: It depends on your business cash flow, tax situation, and equipment needs. Lease to own preserves capital while purchasing avoids interest costs.