Lease vs. Buy Calculator
Compare the total cost of leasing versus buying an asset. See which option costs less and when buying breaks even against leasing.
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How to use this calculator
Compare cash paid out on each side. The lease is assumed to be renewed at the same payment when the loan runs longer; no residual or resale value is included.
- 1
Enter the full price of the asset (car, equipment, etc.).
- 2
Enter the lease terms: monthly payment and lease duration in months.
- 3
Enter the purchase terms: down payment, loan interest rate, and loan term in months.
- 4
Compare total costs and note the break-even month — the point at which buying becomes cheaper than leasing.
Frequently asked questions
What formulas does this tool use?
Lease cost is the monthly payment times the lease term. For buying, the loan is price minus down payment, paid with the fixed-payment formula payment = L × r ÷ (1 − (1 + r)^−n) at the annual rate ÷ 12, and total purchase cost is the down payment plus all loan payments. On the starting values the lease is $14,400.00 over 36 months and buying costs $40,219.07 over 60, with a $586.98 loan payment.
What does the “Lower Outlay” line compare?
It compares cash paid over the longer of the two terms, assuming the lease is renewed at the same payment. With a 36-month lease and a 60-month loan, 60 months of lease payments ($24,000.00) are set against the $40,219.07 purchase outlay, so leasing is lower by $16,219.07. It is a comparison of money paid, not of value received.
Is resale value included?
No. The tool has no field for what the asset could be sold for, so the purchase side shows everything paid and nothing recovered. If you have an estimate, subtract it from the Total Purchase Cost by hand. The result is therefore tilted towards leasing, and that is the main thing to keep in mind when reading it.
How is the break-even month found?
The tool steps month by month and reports the first month when cumulative lease payments exceed the down payment plus loan payments made so far. After the loan ends, buying costs no more, so a break-even always arrives if the lease payment is above 0. At the starting values it is month 101. A lease payment of 0 shows “n/a”.
Which costs are not in the numbers?
Mileage or wear charges, lease-end fees, acquisition fees, taxes, registration, insurance, maintenance, and the tax treatment that may apply to a business. The lease payment is whatever you type in; the tool does not derive it from a price, residual or money factor.
What does the tool do with unusual inputs?
A loan rate of 0% divides the loan by its months, with no interest. A loan term under 1 month, an asset price of 0, or a down payment above the price, returns an error. A lease payment of 0 is used as zero, so the lease cost is $0.00. A cleared number box counts as 0, so a cleared asset price returns an error asking for a price above 0, a cleared loan term returns the loan-term error and a cleared lease payment gives a $0.00 lease cost. Negative numbers count as 0 and terms are rounded to whole months.
Can the lease and loan terms differ?
Yes, and the tool is built for that. “Total Lease Cost” covers the lease term only, “Total Purchase Cost” covers the loan term, and “Buy Cost Over Lease Term” shows what has been paid on the purchase side by the end of the lease. With a 60-month lease at $500 and a 36-month loan (other inputs at their starting values), the horizon is 60 months and leasing costs $8,100.92 less in outlay.
Does it recommend leasing or buying?
No. It reports which side has the lower cash outlay on the numbers entered. Whether that matters depends on how long you would keep the asset, what it would be worth, and your own finances, and quotes from the lessor or lender and any adviser you consult govern the real terms.
Lease or buy: a cash-outlay comparison
What gets added up on each side
On the lease side, the tool multiplies the monthly payment by the term. On the purchase side, it finances the price less the down payment at the loan rate, then adds the down payment back in. With the starting values ($35,000 price, $400 for 36 months, $5,000 down, 6.5% over 60 months) leasing costs $14,400.00, while buying costs $40,219.07, including $5,219.07 of interest on a $586.98 monthly loan payment. Neither side counts the value of what you hold at the end.
How the lease payment moves the answer
The table holds the purchase side fixed and changes only the lease payment. The lease column covers 60 months of payments, the longer of the two terms, so the figures are renewal costs rather than the 36-month lease on its own. Somewhere between $600 and $700 a month the comparison flips, and the break-even month falls quickly as the payment rises.
| Lease payment | Lease outlay over 60 months | Lower outlay | By | Break-even month |
|---|---|---|---|---|
| $400 | $24,000.00 | Leasing | $16,219.07 | 101 |
| $500 | $30,000.00 | Leasing | $10,219.07 | 81 |
| $600 | $36,000.00 | Leasing | $4,219.07 | 68 |
| $700 | $42,000.00 | Buying | $1,780.93 | 45 |
| $800 | $48,000.00 | Buying | $7,780.93 | 24 |
| $1,000 | $60,000.00 | Buying | $19,780.93 | 13 |
Three more runs
For a $30,000 asset with $450 for 36 months and a 5% loan over 48 months with $3,000 down, the loan payment is $621.79, total purchase cost $32,845.96 and the lease over 48 months $21,600.00, so leasing is $11,245.96 lower; break-even is month 73. With $25,000 financed at 0% over 60 months, the loan payment is exactly $416.67 and interest is $0.00. A $40,000 asset with $700 for 36 months and a 7% loan over 36 months costs $43,793.57 to buy against $25,200.00 to lease.
Why resale value matters here
The comparison is a comparison of money paid, so the purchase side looks worse than it may be, because it treats the asset as worth nothing at the end. A resale estimate of your own, subtracted from the purchase total, would narrow or reverse the gap; the tool does not supply one and would not know it. Mileage limits, wear charges and fees at the end of a lease go the other way and are also outside the tool.
Using the figures
Treat the output as a way to see how the lease payment, down payment, loan rate and terms interact, then replace the inputs with the numbers from written quotes. Rates, fees and eligibility change and differ by provider, and the lessor’s or lender’s quote governs the actual terms.
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Results are estimates for informational purposes only and do not constitute professional financial, medical, legal, or technical advice. Read full disclaimer →