Lease vs Buy 2026 - Equipment Cost Comparison

2026 Lease vs Buy Decision

Equipment needed. Two options: lease or buy. Each has pros and cons. Different costs. Different ownership. What's right for your business?

This guide compares lease vs buy. Real numbers. Real costs. Real ownership benefits.

How Leasing Works

Operating Lease Structure

• Term: 3 - 5 years
• Monthly rental payment
• Deposit: 1 - 3 months rental
• Maintenance: Often included
• Ownership: Return equipment at end

Real Lease Example: Forklift

Equipment: 3-ton forklift (RM60,000)

Lease Terms:
• Monthly rental: RM1,200
• Deposit: RM3,600 (refundable)
• Term: 5 years
• Maintenance: Included
• Total payments: RM72,000 + RM3,600 deposit

Net cost: RM68,400 (deposit returned)
Ownership: None (return forklift)

How Buying (Hire Purchase) Works

Hire Purchase Structure

• Term: 5 - 7 years
• Monthly installment (principal + interest)
• Down payment: 0% - 20%
• Maintenance: Your responsibility
• Ownership: You own it after final payment

Real Hire Purchase Example: Same Forklift

Equipment: 3-ton forklift (RM60,000)

Ing Heng Hire Purchase (0% Down):
• Down payment: RM0
• Monthly installment: RM1,050
• Term: 7 years
• Maintenance: RM4,000/year (your cost)
• Total payments: RM88,200 + RM28,000 maintenance

Total cost: RM116,200
Ownership: Full (worth RM15,000 - RM20,000 at end)

Net cost: RM96,200 - RM101,200

Cost Comparison Analysis

5-Year Comparison (Same Forklift)

Lease Option:

• Monthly rental: RM1,200
• 5-year cost: RM72,000
• Deposit: RM3,600 (returned)
• Maintenance: RM0 (included)
• Net 5-year cost: RM68,400
• Asset at end: RM0

Buy Option (0% Down Hire Purchase):

• Monthly installment: RM1,050
• 5-year payments: RM63,000
• Down payment: RM0
• Maintenance: RM20,000 (5 years)
• Net 5-year cost: RM83,000
• Asset at end: RM35,000 (remaining value)

Difference: Buy costs RM14,600 more over 5 years.

BUT: After Year 5, lease = RM0 asset. Buy = RM35,000 asset + no more payments.

Tax Comparison

Lease Tax Deductions

• Monthly rental: 100% deductible
• No depreciation claim (don't own)
• 5-year deduction: RM72,000

Tax savings at 24%: RM17,280

Buy Tax Deductions

• Interest portion: 100% deductible
• Depreciation: Capital allowance claim
• Maintenance: 100% deductible
• 5-year deduction: RM95,000+

Tax savings at 24%: RM22,800+

Tax advantage: Buy wins by RM5,500+

When Leasing Makes Sense

Scenario 1: Short-Term Need

• Project duration: 1 - 2 years
• Seasonal operation
• Testing equipment before commitment

Scenario 2: Technology Changing

• Equipment becomes obsolete quickly
• Want upgrade flexibility
• Avoid ownership risk

Scenario 3: Low Usage

• Equipment used less than 1,000 hours/year
• Lease limits not exceeded
• Ownership not justified

When Buying Makes Sense

Scenario 1: Long-Term Use

• Equipment needed 5+ years
• High utilization (2,000+ hours/year)
• Stable business operations

Scenario 2: Asset Ownership

• Build business balance sheet
• Equipment has resale value
• Freedom to modify/customize

Scenario 3: Cost Control

• Fixed payments for ownership
• No excess usage charges
• After payoff: equipment is free

0% Down Payment Advantage

Traditional hire purchase requires 10-20% down. Leasing requires 1-3 months deposit.

0% down hire purchase = No upfront cash. Same ownership benefits. Equipment deployed immediately.

2026 Decision Framework

• Calculate total cost of ownership
• Consider tax benefits
• Evaluate usage needs
• Assess long-term plans
• Choose based on your situation