How to Understand an Equipment Lease Payment Calculator

How to Understand an Equipment Lease Payment Calculator - Equipment, Payment, Calculator

Don’t quite understand how to select the right equipment lease payment calculator for the 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 equipments. With this, business owners are able to decide earlier on which lease option is appropriate for their budget.

In this article, we will discuss the different equipment lease payment calculators to use, and which 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 calculators can be found online and are free and easy to use. 

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

 

3 Equipment Leases That Uses a Calculator

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. 

Operating Lease Or Fair Market Value Lease

A fair market value (FMV) lease or an operating lease works the same as leasing a house or car. Monthly payments are made to make of the equipment. 

At the end of lease, you will be given the choice to purchase the equipment at its FMV or end the contract.

$1 Buyout Lease

With a $1 buyout lease, the lessor’s payments will go towards interest. This also means that payments made will be towards the full cost of the equipment. 

This arrangement is quite similar to purchasing your desired equipment, but with a loan. 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% Option Lease

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

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

 

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. 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 You Can Afford

An equipment lease payment calculator can help you calculate how much you can afford to lease and pay monthly.

This calculator computes the amount based on the following:

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

How Much Are Your Equipment Financing Payments

The equipment lease 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.

The calculator will compute your payment amount necessary based on:

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

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 amount, 
  • Lease rate, 
  • Residual amount, 
  • 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 equipment you can afford to lease. The calculator gives you an idea of how much you can expect to be spending for the equipment. The amount calculated uses your budget as a basis for 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. 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 operating or FM lease, the $1 buyout lease, and the 10% option 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.
  • 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.

If you have questions about an equipment lease payment calculator, you can call Trust Capital USA at (866) 458-4777.

 

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ArticleHow to Understand an Equipment Lease Payment Calculator

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