Lease term
How long you are committed to making payments, commonly 24 to 60 months for POS equipment.
Longer terms lower the payment but raise the total cost.
EQUIPMENT LEASE CALCULATOR
Know the true cost of a lease before you sign.
Enter a lease quote for POS or card terminal equipment and see the total you will pay, the end-of-term buyout, and the interest rate hidden in the monthly payment.
PAYMENTS IN MOTIONKnow the true cost of a lease before you sign.
RUN THE NUMBERS
Enter your lease quote.
Start with the equipment’s cash price and the quoted monthly payment, or estimate a payment from a lease rate. Add the buyout option, taxes, insurance, and fees from your quote.
THE SHORT ANSWER
How do you calculate the cost of an equipment lease?
Multiply the monthly payment, including tax and insurance, by the number of months, then add upfront fees and the end-of-term buyout. Compare that total with the equipment’s cash price. The difference is what the lease costs you, and the implied rate shows what interest rate the payments represent.
THE FORMULA
Total lease cost = (monthly payment × term) + fees + buyout
Example: $89 a month for 48 months is $4,272. Add $5 a month of protection ($240), a $99 documentation fee, and a $300 fair-market-value buyout, and the total is $4,911 for equipment that costs $3,000 to buy outright.
KEY TERMS, EXPLAINED
The language of equipment leases.
$1 buyout
You own the equipment for a nominal $1 after the final payment. Payments are usually higher.
Behaves much like financing; compare it with a loan.
Fair market value (FMV)
At the end you may buy the equipment at a value the leasing company sets, return it, or renew.
Ask how FMV is determined before signing.
10% purchase option
You can buy the equipment for 10% of its original cost at the end of the term.
Add the 10% to the total of payments when comparing.
Non-cancellable lease
You must pay for the full term even if you close the business or change processors.
Read the cancellation clause and ask for it in writing.
Automatic renewal
Some leases renew month to month or for another term if you do not give notice before the end.
Diary the notice deadline.
Loss-damage waiver / insurance
A charge covering damage or loss of the equipment, sometimes added automatically.
Check whether your business insurance already covers it.
Advance payments
First (and sometimes last) payment due at signing.
Count advance payments in your upfront cash needs.
Implied interest rate
The annual rate that makes the lease payments and buyout equal the equipment’s cash price.
Compare it with financing APRs to see which is cheaper.
SIDE BY SIDE
Lease end-of-term options compared.
| Option | Payment level | End of term | Best for |
|---|---|---|---|
| $1 buyout | Higher | You own it for $1 | Long-life equipment you plan to keep |
| 10% purchase option | Moderate | Buy for 10% of cost | Keeping equipment with a lower payment |
| Fair market value | Lower | Buy at FMV, return, or renew | Equipment you may upgrade |
| Return | Lowest | Hand the equipment back | Short-term or fast-changing needs |
STEP BY STEP
How to evaluate a lease quote.
- 01
Get the cash price
Ask what the same equipment costs to buy outright so you have a baseline.
- 02
List every payment
Monthly payment, tax, insurance or protection, and upfront fees.
- 03
Confirm the end-of-term option
$1, 10%, fair market value, or return, and how each is priced.
- 04
Calculate the total
Use the calculator to see the total cost and implied rate.
- 05
Compare alternatives
Check the same equipment with financing, rental, or purchase before signing.
FREQUENTLY ASKED
Questions businesses ask.
Is it better to lease or buy POS equipment?
Buying usually costs less overall. Leasing lowers the upfront cost but often costs more in total, and many leases cannot be cancelled. Compare the total cost of each option with this calculator.
What is a typical implied rate on an equipment lease?
It varies widely by leasing company, credit, equipment, and term. Calculate the implied rate for your own quote and compare it with financing offers.
Can I cancel a POS equipment lease early?
Many equipment leases are non-cancellable for the full term. Read the cancellation clause before signing.
Do I own the equipment at the end of a lease?
Only if your lease includes a purchase option and you exercise it. With a fair market value lease you may buy, return, or renew.
Are lease payments tax deductible?
Lease payments and equipment purchases can have different tax treatments. Ask your tax advisor how each applies to your business.