The difference is ownership, not the payment
An equipment finance agreement transfers title to you at signing. The lender holds a lien until the balance clears, and the asset sits on your books.
A lease keeps title with the lessor. You pay for the right to use the equipment across the term, and what happens at the end depends entirely on which lease you signed.
Three end of term outcomes
Read the buyout clause before the payment. It is the number that decides the real cost.
- /Equipment finance agreement: nothing happens at the end. The lien releases and you keep the asset.
- /Capital lease with a 1 dollar buyout: functionally a purchase, priced like one, with title transferring for a nominal amount.
- /Fair market value lease: the lowest monthly payment, with a buyout at market value, a renewal, or a return at the end.
Run the total, not the monthly
A fair market value lease on a 60,000 kitchen package can run 200 to 400 dollars less per month than financing the same package. Over 60 months that gap looks like savings until the buyout lands.
Add every payment, the buyout, and any documentation or end of term fees. Compare that single number against the financed total. On equipment you plan to keep for its full life, financing is usually cheaper.
When leasing is the better call
Lease technology that ages out: POS hardware, kitchen display systems, and anything with a 3 year replacement cycle. Returning obsolete hardware is a feature, not a loss.
Lease when the space is uncertain. A 3 year lease on the building and an 84 month equipment loan is a mismatch that shows up at renewal.
Finance the durable assets: hoods, walk-ins, refrigeration, ranges, and dish machines routinely outlive their term.
Tax treatment differs, and it matters
Financed equipment and capital leases generally qualify for Section 179 and bonus depreciation, so the deduction lands the year the equipment is placed in service. Fair market value lease payments are generally deducted as an operating expense instead.
The right answer depends on your tax year and your income. Confirm treatment with your accountant before you sign, not after.
Calculator
Equipment payment and total cost
Enter the quote, the rate you were offered, and the term. The payment is the standard amortizing payment, and the total cost is what leaves the business above the amount financed.
Programs commonly cover 80 to 100 percent. Leave at 0 if none is required.
Use the rate on the written offer, not an estimate.
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Tell us about the operation and the results open up.
The math above runs on your inputs. Send the request and the figures unlock on this page, a specialist reviews what you entered, and you get written options to compare. No credit application, no hard pull.
We email you a copy of these figures. They are estimates for planning, not an offer, a quote, or a preapproval of any kind.
The arithmetic
payment = P x i / (1 - (1 + i)^-n), where P is the amount financed, i is the annual rate divided by 12, and n is the number of monthly payments. Total cost = (payment x n) - P.
Sources
- 1Amortizing payment formula: P x i / (1 - (1 + i)^-n)Standard time value of money identity. The same closed form used by the PMT function, with i as the monthly rate and n as the number of monthly payments.
- 2Bank prime loan rate, the base most business term financing is priced againstFederal Reserve, H.15 Selected Interest Rates. Published daily by the Federal Reserve. Enter the current prime rate when pricing a variable rate offer.
- 3Annual percentage rate definition, 12 CFR 1026.22Consumer Financial Protection Bureau, Regulation Z. APR is the nominal annual rate that discounts a payment stream back to the amount advanced. We solve it numerically from the payment schedule and multiply the periodic rate by the number of periods per year.
Estimates, not offers: Amounts, terms, and funding times are estimates based on programs commonly available in food service. Actual terms vary by program, lender underwriting, time in business, revenue, and credit profile. Nothing here is an offer of credit or a guarantee of approval.