Lease vs Buy Calculator
Compare leasing equipment or vehicles against buying outright or on finance, shown in both nominal and present-value terms.
Formula and method
Lease cost = upfront payment + (monthly payment × months).
Buy cost = deposit + total finance repayments − residual value at the end of the period.
Present value discounts every future cash flow at your chosen annual rate, applied monthly, so payments made later count for less than payments made today.
Worked example
A €40,000 asset over 4 years. Lease: €2,000 upfront plus €700 a month. Buy: €8,000 deposit, €32,000 financed at 7%, €14,000 residual.
Leasing costs €2,000 + (48 × €700) = €35,600 nominally.
Buying costs the deposit plus repayments less the €14,000 the asset is still worth - which is why the residual assumption usually decides the comparison.
FAQ
Frequently asked questions
What exactly is being compared here?
The total cost of leasing an asset against buying it, whether with cash or finance, allowing for what the asset is likely worth at the end.
Why does it show two totals, nominal and present value?
Nominal is just the payments added up. Present value discounts later payments to reflect that money paid in five years costs less in today's terms - and it usually tilts the answer toward leasing.
What discount rate should I use?
Your cost of capital, or whatever rate you could borrow at, is a reasonable starting point. Push the rate higher and deferred payments look artificially cheap.
Does this include tax?
No. Lease payments and capital allowances or depreciation are taxed differently depending on where you operate, and that can flip the result.
What about maintenance and flexibility?
Not in the numbers. Leases often bundle servicing and make upgrading easier; owning gives you full control of the asset. Weigh those against the cost figures yourself.
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