Lease or buy? It's one of the most common questions contractors ask. The right answer depends on how long you'll keep the machine, how many hours you'll put on it, your cash flow and your tax situation.
What is the difference between leasing and financing equipment?
When you finance a machine, usually through an Equipment Finance Agreement (EFA) or a loan, you're buying it. You make payments and own it outright at the end. When you lease, you pay to use it for a set term, usually 24–60 months. At the end, depending on the lease type, you return it, renew, or buy it for a set or fair-market price.
Which has the lower monthly payment?
Leases with a meaningful residual, such as a fair-market-value lease, usually have lower monthly payments because you're paying for the machine's use, not its full value. Financing and $1 buyout leases have higher payments but build equity.
When does financing make more sense?
- You'll run the machine for many years or put heavy hours on it.
- You want equity you can sell or trade later.
- You want to modify the machine freely, without lease hour caps or return-condition rules.
- You want depreciation deductions such as Section 179 (ask your tax pro).
When does leasing make more sense?
- You need the machine for a specific project or a few seasons.
- You want to upgrade to newer technology regularly.
- Cash flow matters more than ownership.
- You'd rather deduct lease payments as an operating expense (ask your tax pro).
What are the hidden costs of leasing?
Watch for annual hour limits and overage charges, return-condition standards (undercarriage, tires, damage), early-termination fees and end-of-term purchase prices. Read the return clause before signing.
What about used equipment? Can it be leased?
Yes. Leases and EFAs are both available on used machines from dealers and private sellers. Buying used and financing it is often the lowest-cost way to own iron, because the first owner took the steepest depreciation.
What lease types are there?
EquipMarket's lending partner offers an EFA (finance-to-own), a traditional lease, a 10% FMV lease and a $1 buyout lease. Each is explained in FMV vs. $1 buyout and other lease types.
How do taxes differ?
Generally, buying through an EFA or $1 buyout can qualify for depreciation and Section 179 expensing, while true-lease payments are usually deducted as a business expense. Rules change and depend on your situation, so read our Section 179 Q&A and confirm with a tax professional.
How do I apply for equipment financing through EquipMarket?
EquipMarket works with our lending partner, Southend Capital, to finance dealer and private-party equipment. One short application gets you pre-qualified. Terms run 24 to 72 months, and you can choose an Equipment Finance Agreement (finance-to-own), a traditional lease, a 10% fair-market-value lease or a $1 buyout lease.
Apply for financing now → or compare financing options and estimate a payment. Rates and approval are set by the lender based on your credit, time in business and the machine.
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