In this article
The supplier says "just €395 a month" and nobody at the table works out what that actually costs over the life of the machine.
Every operator faces this eventually: the walk-in dies, the combi oven is due for replacement, or you're opening a second site and the supplier lays two quotes side by side — one to buy, one to lease. Leasing always looks tempting: no big outlay up front, one predictable monthly line, and "it's tax-deductible anyway." What almost never comes with it is the arithmetic underneath.
Nearly every guide on this decision stops at a feeling — "leasing protects your cash flow," "buying is cheaper long-term" — without the numbers that actually decide it. This article does the opposite: 7 concrete, checkable numbers, from the value your equipment loses the day you sign to the year buying overtakes leasing on total cost. At the end sits a calculator that answers it with your own figures, not a rule of thumb.
Two things up front. First, this article is about buying one specific asset — a combi oven, walk-in, dishwasher, fryer. For how much capital you need in total to open or grow, see our guide on the startup budget and financing plan. Second, this is not tax or legal advice. VAT and depreciation rules differ by country and by contract structure — always confirm how your specific contract is treated with your own accountant, especially the point raised in number 3 below.
The 7 numbers that settle it
Each number below stands on its own, but they build on each other — number 7 is where the first six come together.
1. The day you sign, the machine is already worth 20% less
Commercial kitchen equipment doesn't lose most of its value gradually — it loses it immediately. Our own restaurant valuation & takeover calculator already prices equipment already in use with a fixed convention: 20% of the value is gone the moment a machine is installed and used, after which the remaining value declines in a straight line over 12 years to a floor of 10% of the original price. That isn't a tax depreciation schedule — it's roughly what a used combi oven or walk-in actually fetches on the second-hand commercial catering market, and it's exactly why leasing companies price the residual value into a contract so conservatively.
For you as the buyer, that number changes nothing about what the machine does — the oven still bakes just as well. For the arithmetic, it changes everything: a lease with a purchase option after three years prices a residual that sits close to that declining curve, and the lower that residual, the higher your monthly payment has to be to cover the gap. This is the first place "just €X a month" starts hiding what's really going on: the leasing company has already priced this curve in — you just haven't seen it yet.
2. What "just €X a month" is actually costing you — the implicit rate
A lease agreement almost never shows an interest rate. It shows a monthly payment, and a monthly payment can quietly hide a rate you'd never accept on a bank loan. According to European Central Bank interest rate statistics, the average rate on a new small business loan in the euro area sat around 3.6–3.7% in early 2026 (ECB, Euro area bank interest rate statistics, January–February 2026). That's the baseline to compare against. Industry reporting on equipment finance and leasing commonly puts effective rates on leasing and comparable asset-finance products several percentage points above that — typically 5% to 20%, and sometimes higher, once arrangement fees, insurance and residual-value risk are priced into the monthly figure.
You don't need to take those sources on faith — the calculator further down this article shows the implicit rate baked into your own quote. Enter the equipment price, the monthly payment and the term, and it works backward, using the same annuity formula a bank uses to price a loan, to the annual interest rate those three numbers imply together. In most quotes operators send us, that implied rate lands between 8% and 15% — well above what the same business would pay for an ordinary investment loan. That isn't necessarily a reason to never lease; it's a reason to know the rate before you sign, not after.
The equipment's value falls (20% gone on day one, then straight-line to 10% over 12 years) while cumulative lease cost keeps climbing — based on the figures below
Calculate this with your own purchase price and lease offer in the calculator below.
3. The VAT trap almost nobody's accountant flags until year two
This is where it gets genuinely technical, and it's exactly the point where generic financing guides stop. Under the EU VAT directive (Directive 2006/112/EC), a hire or lease agreement with a purchase option is treated as either a supply of goods (VAT due upfront on the full price, Article 14(2)(b)) or a supply of services (VAT due per instalment, each time you pay a lease payment). The difference isn't the label the contract carries — "finance lease" versus "operating lease" doesn't settle it for VAT purposes — it's the economic reality of the purchase option.
The Court of Justice of the EU drew the exact line in Mercedes-Benz Financial Services UK Ltd v Commissioners for Her Majesty's Revenue and Customs (Case C-164/16, judgment of 4 October 2017). The question the Court answered: when must a lease-with-option contract be treated as a supply of goods? Answer: when it can be inferred from the contract's financial terms that exercising the purchase option appears to be "the only economically rational choice" the lessee will be able to make at that point. In the case itself, the final payment sat at 42–48% of the vehicle's original value — high enough that walking away remained a genuine, non-trivial choice, so the Court classified the agreement as a supply of services. A low or symbolic final payment sits at the other end: exercising the option is then effectively the only sensible move, and the contract counts as a supply of goods — VAT on the full purchase price due from day one, rather than spread across the term.
Why this matters for a kitchen: it determines how and when you can recover the VAT on your equipment, and that difference in cash flow can be significant in the first year after purchase — precisely when your cash position is tightest. This is not tax advice, and the exact classification depends on how your specific contract is drafted; have your accountant confirm which of the two categories your contract falls under before you sign.
4. Your walk-in will outlive three lease contracts
Most commercial catering industry sources put the useful life of refrigeration units and combi ovens at roughly 10 to 15 years with normal maintenance; commercial dishwashers typically need replacing after 7 to 10 years once pumps and heating elements give out. Hospitality equipment lease terms, by contrast, are typically written for 24 to 60 months — two to five years. That's not a market accident: a leasing company wants its residual-value risk closed out within a predictable window, while your walk-in just keeps running.
The result of that mismatch: if you keep a machine for 12 years and re-sign a 5-year lease each time, you re-negotiate the contract twice — three lease cycles in total for the same piece of equipment, each with its own arrangement costs, its own implicit rate and, in most cases, a higher monthly payment than the last one because the equipment is now older. With a loan, the repayments simply stop at some point, and you pay nothing further for a machine that still has years of service left in it. The calculator further down makes this literal: enter your expected years of use and it shows exactly how many lease cycles that requires, set against a loan that ends on a fixed date.
5. What's quietly bundled into the monthly number
A lease is rarely pure financing. Most providers bundle in service, maintenance and sometimes a loan machine while yours is being repaired — exactly the kind of unpredictable cost our guide on kitchen equipment maintenance quantifies in detail: 1–2% of annual revenue is the sector's own rule-of-thumb maintenance budget there, and a single weekend emergency callout can eat several years of that budget in one evening. If your lease removes that risk, that's a real benefit — you're paying for predictability, not just for the machine.
The problem is that the bundle is rarely itemised. So ask explicitly: what share of the monthly payment is capital repayment, what share is interest, and what share is service and insurance? A provider that can't or won't break that down is implicitly telling you the answer wouldn't sit well with you. The graphic below shows how that split typically looks in practice — and why a loan looks completely different on this front, since there you're paying purely for the equipment itself, and arranging maintenance separately through the kind of service contract described in step 5 of our maintenance guide.
With a loan you pay purely for the equipment itself. A lease typically has more baked in — an illustrative split, not one specific provider's figures
Loan
Lease
The lease split is an illustrative, commonly-seen structure — ask your own provider for the breakdown of your specific contract (see number 5). The loan split is calculated from the calculator's default values below.
6. What it does to the number the bank actually says yes on
A purchase decision never sits in isolation from the rest of your business. Our own startup budget & financing plan tool works out, among other things, the debt service coverage ratio (DSCR) — the ratio between what your business generates operationally and what it owes in repayments — because that is precisely the number a bank tests before it approves a loan. One large equipment purchase moves that ratio for your whole business, whether you lease or buy: a loan raises your monthly repayment burden directly, and a lease does the same thing in practice, even though it rarely shows up as "debt" on your balance sheet.
That's exactly why the lease-versus-buy choice can't be separated from how much financial headroom your business actually has left. A business that has just opened and needs every euro of cash flow may genuinely need the lower entry cost of a lease, even if the loan is the cheaper route on paper — the real question isn't only what the equipment costs over its life, but whether your business survives the first 12 to 18 months financially with the choice you make. Run it through the financing planner before you sign, not after.
7. The year buying wins
Every number above comes together in one question: at what year of use does the total cost of buying overtake the total cost of leasing? That crossover depends on four things at once — the purchase price, your expected years of use, the lease's monthly payment and term, and the loan's interest rate and term. Change any one of the four and the crossover year moves.
There is no universal answer — every quote, every machine and every business produces a different year. That's what the calculator below is for: enter your own purchase price, expected years of use, lease offer and loan terms, and it shows not just the total cost of both paths, but also the implicit interest rate of your lease offer (number 2) and the exact year buying becomes cheaper than continuing to lease.
Lease or buy — run it with your own numbers
Lease or buy — run it with your own numbers
Enter your purchase price, expected years of use, lease offer and loan terms. The calculator works out the total cost of both paths, the lease's implicit interest rate, and the year buying wins.
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An indicative calculation from your own inputs — not a quote and not tax advice. The VAT treatment (number 3) is not built into this figure and depends on your contract structure.
Your action plan for the next quote
You don't need to memorise this article — you need it the moment a quote lands on the table. Three steps, a quarter of an hour each:
Before you request a quote:
- Look up the expected lifespan of the equipment (see number 4) and note it as your "expected years of use"
- Ask your bank what rate you'd get on an investment loan for that amount, even if you don't plan to borrow
- Work out what the purchase does to your DSCR with the financing planner (number 6)
With the quote in hand:
- Ask explicitly for the breakdown of the monthly payment: capital, interest, service, margin (number 5)
- Ask how the end-of-term purchase option is structured, and have your accountant confirm the VAT classification (number 3)
- Enter the figures into the calculator above and note the implicit rate and the crossover year
Before you sign:
- Compare the implicit lease rate with the bank rate you were quoted — a gap of more than a few percentage points is worth a conversation with your accountant
- Work out how many lease cycles your expected years of use requires (number 4) and what that costs cumulatively
- Keep the calculation — the next purchase won't need you to start from scratch
Conclusion: neither option is always right
This article deliberately doesn't pick a side. Leasing can be the right call for a business that has just opened and needs every euro of cash flow, or for equipment whose technology ages quickly. Buying can be the right call for equipment you'll use for 10 years or more, in a business that can absorb the upfront cost. The point of this article isn't which side you land on — it's that you make the call with the 7 numbers above in hand, instead of a feeling about "just €X a month."
Once your business is running and you want to track purchases like this without recalculating from scratch every time, that's exactly the kind of overview HappyChef is built for: your revenue, occupancy and bookings in one screen, so an investment decision like this one is never separated from how your business is actually doing. See what it costs — a one-time purchase, no commission per cover.