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How to Understand an Equipment Lease Calculator

Posted On: April 28, 2018 author Paul Kendall

Don’t quite understand how to select the right equipment lease payment calculator for the equipment lease you need?

Figuring out the true cost of an equipment lease can be tricky. Even more so when you are still on the bench about what lease option to go for and have minimal budget. 

This is where an equipment lease payment calculator comes in handy.

An equipment lease payment calculator is used to determine the monthly payments or effective interest rate on equipment leases. With this, business owners are able to decide earlier on which lease option is appropriate for their budget, which give them the best return on investment  and which equipment finance company to work with. Use an equipment leasing calculator to figure out your true cost of buying equipment. 

In this article, we will discuss the different equipment lease payment calculators to use, and which equipment lease options they can be used for.

A Guide to an Equipment Lease Payment Calculator

 

There are five types of equipment lease payment calculator  that business owners use to determine whether a lease option is viable for them. In turn, these can be used to calculate for three different kinds of leases.

These calculators can be accessed online with no charge and produce immediate results. Making use of these can help you make sound financial decisions.

Before we discuss each of these five calculators first, let’s first answer the crucial question: What is an equipment lease payment calculator and how can it help you?

 

What is an Equipment Lease Payment Calculator

 

An equipment lease payment calculator calculates your equipment lease payments. This calculator allows you to accurately plan the costs of any of the three types of leases.

With this calculator, you’ll be able to estimate your:

  • Monthly payments,
  • Balance to own after the term of the lease, and
  • An estimated value of the equipment at the end of the lease.

 

These equipment leasing calculators can be found online and are free and easy to use.

Simply input the right data and the equipment finance calculator will do the rest.

  

 

How to Understand an Equipment Lease Payment Calculator - lease

 

3 Equipment Leases That Uses a Calculator and Their Benefits

 

There are three different lease options that can be calculated with the use of an equipment lease calculator. To help you better choose the best option for you, we will discuss the difference between them.

Fair Market Value Lease OR TRAC Lease 

 

At the end of a fair market value (FMV) lease, you will be given three options. Purchase the equipment at its FMV, return the equipment or renew the equipment lease.

A FMV lease buy outs residual can sometimes be capped at 10-20% by lessors. You'll need to negotiate this purchase option with your lessor. The equipment leasing company will call this a FMV not to exceed 10%.  

A terminal rental adjustment clause lease (TRAC lease) is similar to a fair market value lease except the residual is a negotiated value rather than the equipment's fair market value. At the end of a TRAC lease you can return the equipment to the bank, pay the pre-negotiated residual, or renew the equipment lease. 

100% of your FMV & TRAC Lease payments can be written off your taxable income. Allow uncle Sam to help lower the true cost of ownership on your new equipment acquisitions. 

$1 Buyout Lease

 

With a $1 buyout lease, At the end of your lease term, all you need to do is pay $1 and you can be the owner of your leased equipment. 

10% PUT Lease

 

The 10% PUT lease is almost the same as the $1 buyout lease. However, with this option, you will be paying 10% of the equipment’s value to own it.

Monthly payments are less expensive as compared to the $1 buyout lease as a result.

With a $1 buy out & 10% PUT lease agreement you get section 179 tax benefits. The deduction limit for Section 179 increases to $1,000,000 for 2018 and beyond. 2018 Spending Cap on equipment purchases = $2,500,000. This is the maximum amount that can be spent on equipment before the Section 179 Deduction available to your company begins to be reduced on a dollar for dollar basis. You get a whopping bonus depreciation of 100% for 2018. Bonus depreciation is generally taken after the Section 179 spending cap is reached. With bonus depreciation you can accelerate depreciation up to $2,500,000 in  2018 on all new and used equipment and off the shelf software. 

 

 

How to Understand an Equipment Lease Payment Calculator - calculator

 

5 Different Equipment Lease Calculators and its Benefits

 

We have previously mentioned that there are five different equipment lease calculators that can be used to calculate payments, rates, and how much equipment you can afford to buy. These calculators can help you better decide if the type of financing you’re applying for is a fit for your business.

Calculate How Much Equipment You Can Afford To Lease

An equipment lease payment calculator can help you calculate how much you can afford to lease based on your monthly budget.

This calculator computes the amount based on the following:

  • Payment amount (monthly budget),
  • Lease rate,
  • Residual amount,
  • Lease term (months or years), and
  • The number of advance payments.

 

How Much Are Your Equipment Financing Payments 

This equipment finance payment calculator can help you figure out the possible amount of your equipment lease payments. These can be calculated based on when the payments are expected to be made: monthly, quarterly, semiannual, or annual.

This calculator will compute your payment amount necessary based on:

  • Known funding amount,
  • Lease interest rate,
  • Lease term (months or years),
  • Number of advanced payments or money down, and
  • Payment period (monthly, quarterly, semi-annual, annual).

 

Equipment Lease Interest Rate Calculator

Using the equipment lease interest rate calculator helps you figure out what your equipment lease rate is. The calculator indicates the annual percentage rate you will be paying for, based on your equipment leasing agreement.

You equipment lease interest rate will be calculated based on:

  • A known payment amount,
  • Lease funding amount,
  • Residual amount if any,
  • Lease term (months or years), and
  • The number of advanced payments or down payment amount.

 

Equipment Lease Payments Depending on Payment Period

The equipment lease payment calculator tells you how much you’ll be paying depending on the agreed payment period.

This calculator will give your potential monthly, quarterly, semi-annual and annual payments.  This is useful for budgeting purposes.

The payment amount is computed based on the following:

  • Known lease funding amount,
  • Lease interest rate,
  • Residual amount if any,
  • Lease term (months or years),
  • Number of advanced payments, and
  • Payment period (monthly, quarterly, semi-annual, annual).

 

Equipment Finance Rate Calculator

The equipment finance rate calculator helps you figure out how much your equipment finance rate is on an APR basis. The calculator gives you an idea of how much you can expect to be spending for the equipment by looking at the amortization schedule. 

What Are The Best Calculators To Use?

You can use and run all of these calculations by purchasing an HP 10BII calculator, downloading the HP 10BII app to your smart phone or utilize online calculators run by Trust Capital that also provide an amortization schedule to go with it.

Final Thoughts on How to Understand an Equipment Lease Payment Calculator

Making use of an equipment lease payment calculator is crucial in making sound financial decisions and figuring out your return on investment. It allows you to find out the true cost of equipment leases, and determine whether it is viable for your business.

In this article, we talked about the three kinds of lease options that an equipment lease payment calculator is used for. These are: the TRAC Lease or FMV lease, the $1 buyout lease, and the 10% PUT lease.

These leases can be calculated using the five different equipment lease payment calculators. These calculators vary depending on the purpose and result you are looking for:

  • A calculator that lets you calculate how much you can afford to lease based on your monthly budget.
  • A calculator that shows how much are your equipment financing payments.
  • An equipment lease interest rate calculator.
  • A calculator that helps calculate equipment lease payments depending on payment period.
  • An equipment finance rate calculator.

 

Figure out early on  the cost of buying and financing your equipment. 

If you have questions about an equipment lease payment calculator, you can call Trust Capital at (866) 458-4777. An equipment finance specialist will help you calculate monthly payments subject to credit approval or answer questions about how to use an equipment leasing calculator. 

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