Understand the difference
Buying with cash or a loan generally places the purchase in the business’s ownership, subject to any lender security. Leasing provides use under a contract that defines payments and end-of-term choices. Some leases include purchase options or residual obligations; the legal and accounting details vary.
How to make the comparison
Set the same comparison horizon for both options. Include deposit, payments, maintenance, insurance, installation, taxes, and any buyout or disposal value. Think about how long the equipment will be useful and whether the business expects to replace it frequently. Operating flexibility may be worth something even when it is not the cheapest cash total.
The details that can change your decision
Check return conditions, usage limits, refurbishment charges, automatic renewals, and early termination. A purchase can preserve residual value while exposing the business to resale risk; a lease can still require a substantial final payment. Ask an accountant about tax and accounting treatment for the actual jurisdiction and agreement rather than assuming one category always gives a better deduction.
Your next-step checklist
- Same asset and comparison period
- Complete cash cost and residual value
- Maintenance and return obligations
- Ownership outcome and professional tax review
Crack this combination.
What must a lease comparison include beyond scheduled payments?
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Sources & further reading
This file draws on the following references. Product availability and requirements must be confirmed with the provider.
BDC: equipment financing guideLevr: reviewing a debt term sheet