Lease vs Buy Calculator
Compare the cost of leasing equipment or vehicles against buying them outright or on finance, 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 does this calculator compare?
The total cost of leasing an asset over a period against buying it — with cash or with finance — allowing for the asset's residual value at the end.
Why show both nominal and present value?
Nominal cost adds the payments up. Present value discounts future payments, which reflects that money paid later costs less in today's terms and usually favours leasing.
What discount rate should I use?
A common choice is your cost of capital or the rate you could borrow at. A higher rate makes deferred payments look cheaper.
Is tax included?
No. Lease payments and capital allowances or depreciation are treated differently for tax in most jurisdictions, and the effect can change the answer.
What about maintenance and flexibility?
Not modelled. Leases often bundle servicing and allow easier upgrades, while ownership gives control over the asset. Weigh those alongside the numbers.
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