A lease almost always has the lower monthly payment. Over five years it often costs more. Put a lease on the wrong equipment for the wrong term and you can end up paying 20% to 40% more than an outright purchase. Neither structure wins every time. Which one fits depends on the type of equipment, how much cash you’ll have on opening day and how long you honestly expect to keep the machines.
Below we run the numbers on a $60,000 cardio order and explain the two lease types you’ll be offered. We also flag the tax questions to bring to your accountant, and the cases where leasing really is the smarter call for a startup gym. There are a few.
The Two Lease Structures You’ll Actually Encounter
$1 Buyout Lease
You pay monthly over the term (usually 36 to 60 months) and buy the equipment for a dollar at the end. Total cost lands close to a conventional equipment loan, though the payment can run a little higher since almost no residual value is built in. The accounting is where it differs. Many $1 buyout leases count as finance leases (the older term is capital lease), which puts both the asset and the debt on your balance sheet. Your accountant should confirm how yours will be treated.
Day to day, a $1 buyout lease is ownership wearing a lease’s paperwork. You’re paying for the whole asset. That makes it a good fit for gear you’ll keep a decade or longer, like racks, strength machines and free weights, which commonly last 10 to 15 years in commercial use.
Fair Market Value (FMV) Lease
The payment is lower because you’re paying for only part of the equipment’s value. When the term ends you can buy it at fair market value, give it back or sign a new lease, usually on newer models. FMV leases are often treated as operating leases, where payments run through the income statement as an expense instead of sitting on the balance sheet as debt. The exact treatment depends on the contract and current accounting rules, so ask before you sign.
Cardio is where FMV leases earn their keep. Treadmills, ellipticals and bikes look dated long before a squat rack does. Put treadmills on a 3-year FMV term and you can swap them for new ones without writing a second large check. For equipment that holds its value and never needs a tech refresh, an FMV lease usually costs more in total than buying.
What $60,000 of Cardio Costs Over Five Years
Say you’re financing $60,000 of cardio equipment. Here’s how the main options compare over five years. The figures are illustrative, since your rate depends on your credit, the lender and the market on the day you apply. Use them to see the shape of each deal, not as a quote.
| Structure | Approx. Monthly Payment | Term | Total Paid | Own Equipment After? |
|---|---|---|---|---|
| Cash purchase | N/A | N/A | $60,000 | Yes, immediately |
| Equipment loan (5-yr, ~9%) | ~$1,245 | 60 months | ~$74,700 | Yes, at end of term |
| $1 buyout lease (5-yr) | ~$1,275-$1,350 | 60 months | ~$76,500-$81,000 | Yes, for $1 |
| FMV lease (5-yr) | ~$1,050-$1,150 | 60 months | ~$63,000-$69,000 + FMV buyout or return | Optional at FMV |
The loan row assumes 9% over 60 months: about $1,245 a month, or roughly $14,700 in interest on top of the $60,000. Look at the structure the table shows. Return the equipment at the end of an FMV lease and you’ve paid the least of the three financed options, and you walk away owning nothing. The loan costs more than paying cash, but the equipment is yours. The $1 buyout lease sits a few thousand dollars above the loan.
Why Cash Flow Can Outweigh Total Cost in Year One
In the first 6 to 12 months, a startup gym usually has more riding on monthly cash flow than on what the equipment costs over five years. Members trickle in. Month-one revenue is a fraction of what month twelve brings, while rent and payroll (and the loan payment) start in full on day one.
A lower FMV payment can decide whether you make payroll in month three. If you’re opening with thin reserves, paying more in total for a smaller monthly bill can be the right trade, especially on treadmills you’d want to replace in five years anyway.
With solid reserves, meaning 3 to 6 months of operating expenses held back from your startup capital, the math tips toward a loan or a $1 buyout lease. You pay more than cash would have cost. In exchange you build equity in equipment that has resale value if the business ever needs to restructure.
Our guide to gym equipment financing puts loans, leases and lines of credit side by side, including what lenders check before they approve a startup.
Tax Questions to Take to Your Accountant
Leases and purchases are taxed differently, and the right answer depends on your entity type, how profitable you are that year and current IRS rules. These are the questions worth raising:
- Section 179: You may be able to deduct the full price of qualifying equipment in the year you put it into service, instead of depreciating it over several years. The July 2025 tax law (the One Big Beautiful Bill Act) raised the annual limit to $2.5 million, indexed for inflation, far beyond what a typical gym build-out spends. Equipment bought with cash or a loan qualifies. For leases, it depends on whether the lease is treated as a purchase.
- Bonus depreciation: The same law made 100% bonus depreciation permanent for qualifying property acquired after January 19, 2025, ending the phase-down that had cut it to 40%. Your accountant can tell you whether Section 179 or bonus depreciation works better in your situation.
- Operating lease payments: FMV payments on an operating lease are generally deductible as a business expense. That helps if you’re profitable, though the write-off arrives a month at a time instead of all in year one.
- State rules: Some states don’t follow the federal depreciation rules. Ask about both.
For an owner with taxable income to offset, a first-year write-off on purchased equipment can close much of the gap between buying and leasing. Whether it does for you depends on your actual income, and only your accountant can model that. Don’t pick lease or buy from general tax articles, this one included.
When Leasing Makes Sense for a Startup Gym
Leasing gets a worse reputation than it deserves. Four situations where it’s the right call:
- Cardio on a technology cycle: Treadmills, ellipticals and bikes start looking old within 5 to 7 years, and members notice. An FMV lease lets you rotate that category without eating the loss on worn machines.
- Thin opening reserves: With less than three months of operating expenses in the bank, the smaller lease payment buys breathing room during the membership ramp.
- An unproven concept: First gym and an untested format? A lease cuts your asset risk if you need to pivot.
- Plans for more locations: Some owners lease on purpose to keep capital free for a second or third gym within two to three years.
When Buying (or a Loan) Is the Better Deal
- Strength equipment and free weights: A commercial power rack lasts 15 to 20 years with very little upkeep. Leasing one nearly always costs more in total. Buy racks and cable stations outright or with a loan, and the free weights too.
- Healthy reserves or proven revenue: If you open with a solid cushion, or you’re expanding a gym that already makes money, a loan gets you the equity without the lease premium.
- A long lease on your building: Signed ten years on your space? Then buy. You’re staying put, and the equipment can too.
The Split We Suggest to Most First-Time Owners
Most experienced owners don’t pick one structure for everything. The common setup, and the one we usually suggest, is to buy the strength equipment outright or with a loan and put the cardio on an FMV lease. You own the gear that lasts two decades and keep your options open on the machines most likely to need replacing within five years.
Price the package before you pick the structure. Our package pricing gets better the more you order at once, which lowers the amount you finance no matter how you finance it. The total cost to open a gym guide shows where equipment fits next to build-out, deposits and marketing. Run those numbers first and you’ll know whether your situation calls for protecting cash or building equity.
When you’re ready, start here to finance your gym; Bill’s financing partners usually come back within 24 to 48 hours. Or use the gym cost calculator to pin down your total budget before the first lender call.
Lease what wears out. Own what doesn’t.
