Lease vs buy calculator
What are the entered cash and present costs of leasing versus buying the same asset service?
A teaching example in the units shown below.
These authored example inputs illustrate the calculation. Replace them with your own documented amounts, periods and rates; they are not measured industry averages or available offers.
Outright purchase price. No loan proceeds or repayments are modeled here.
Costs paid in addition to the purchase price; count each once.
Constant month-end maintenance and other costs within the comparison.
Expected sale proceeds after disposal costs. This is your assumption, not a resale guarantee.
Initial costs excluding the separate monthly payments.
Equal month-end payments throughout the comparison horizon.
Costs you still bear in addition to lease payments.
Include applicable return or termination costs. A lease buyout is outside this model.
Compare equivalent asset service for the same 1–600 month period. This is a calculation limit.
Use a consistent dollar basis and a rate appropriate to that basis. This is not nominal loan interest or a supplied government rate.
Your entered scenario
Starting exampleCalculation updated using the entered assumptions.
- Purchase: undiscounted net cash cost
- $24,400.00
- Lease: undiscounted net cash cost
- $30,800.00
Inspect upfront and monthly cash costs
| Month | Purchase cash cost | Lease cash cost | Discount factor | Purchase present cost | Lease present cost |
|---|---|---|---|---|---|
| 0 | $31,000.00 | $1,500.00 | 1.00000 | $31,000.00 | $1,500.00 |
| 1 | $150.00 | $800.00 | 0.99516 | $149.27 | $796.12 |
| 2 | $150.00 | $800.00 | 0.99034 | $148.55 | $792.27 |
| 3 | $150.00 | $800.00 | 0.98554 | $147.83 | $788.43 |
| 4 | $150.00 | $800.00 | 0.98076 | $147.11 | $784.61 |
| 5 | $150.00 | $800.00 | 0.97601 | $146.40 | $780.81 |
| 6 | $150.00 | $800.00 | 0.97129 | $145.69 | $777.03 |
| 7 | $150.00 | $800.00 | 0.96658 | $144.99 | $773.26 |
| 8 | $150.00 | $800.00 | 0.96190 | $144.28 | $769.52 |
| 9 | $150.00 | $800.00 | 0.95724 | $143.59 | $765.79 |
| 10 | $150.00 | $800.00 | 0.95260 | $142.89 | $762.08 |
| 11 | $150.00 | $800.00 | 0.94799 | $142.20 | $758.39 |
| 12 | $150.00 | $800.00 | 0.94340 | $141.51 | $754.72 |
| 13 | $150.00 | $800.00 | 0.93883 | $140.82 | $751.06 |
| 14 | $150.00 | $800.00 | 0.93428 | $140.14 | $747.42 |
| 15 | $150.00 | $800.00 | 0.92975 | $139.46 | $743.80 |
| 16 | $150.00 | $800.00 | 0.92525 | $138.79 | $740.20 |
| 17 | $150.00 | $800.00 | 0.92077 | $138.12 | $736.61 |
| 18 | $150.00 | $800.00 | 0.91631 | $137.45 | $733.05 |
| 19 | $150.00 | $800.00 | 0.91187 | $136.78 | $729.50 |
| 20 | $150.00 | $800.00 | 0.90745 | $136.12 | $725.96 |
| 21 | $150.00 | $800.00 | 0.90306 | $135.46 | $722.44 |
| 22 | $150.00 | $800.00 | 0.89868 | $134.80 | $718.95 |
| 23 | $150.00 | $800.00 | 0.89433 | $134.15 | $715.46 |
| 24 | $150.00 | $800.00 | 0.89000 | $133.50 | $712.00 |
| 25 | $150.00 | $800.00 | 0.88569 | $132.85 | $708.55 |
| 26 | $150.00 | $800.00 | 0.88140 | $132.21 | $705.12 |
| 27 | $150.00 | $800.00 | 0.87713 | $131.57 | $701.70 |
| 28 | $150.00 | $800.00 | 0.87288 | $130.93 | $698.30 |
| 29 | $150.00 | $800.00 | 0.86865 | $130.30 | $694.92 |
| 30 | $150.00 | $800.00 | 0.86444 | $129.67 | $691.55 |
| 31 | $150.00 | $800.00 | 0.86025 | $129.04 | $688.20 |
| 32 | $150.00 | $800.00 | 0.85609 | $128.41 | $684.87 |
| 33 | $150.00 | $800.00 | 0.85194 | $127.79 | $681.55 |
| 34 | $150.00 | $800.00 | 0.84781 | $127.17 | $678.25 |
| 35 | $150.00 | $800.00 | 0.84371 | $126.56 | $674.96 |
| 36 | −$11,850.00 | $1,300.00 | 0.83962 | −$9,949.49 | $1,091.51 |
Formula and interpretation
Purchase net cash cost = price + upfront fees + (monthly operating cost × horizon months) − net resale proceeds
Lease cash cost = upfront fees + [(monthly lease payment + monthly operating cost) × horizon months] + closing fees
Present cost of a month-end amount = that amount ÷ (1 + effective annual discount rate)^(month ÷ 12)
The displayed difference is purchase cost less lease cost.
To reproduce the worked example, choose Hypothetical arithmetic example under Starting example. Business presets have their own inputs; compare the selected values before applying the result.
The comparison assumes an outright cash purchase and equivalent asset service over the same horizon. Opening payments occur at Month 0; later payments and disposal proceeds occur at month end.
Use one consistent dollar basis. Constant-dollar cash amounts need a compatible real discount rate; the tool does not project inflation.
A negative cost difference means purchase has the lower entered cost on that measure. Present cost measures timing, not available cash or the best overall business choice.
Worked example over 36 months: a $30,000 cash purchase plus $1,000 fees and $150 monthly operating cost, less $12,000 net resale, costs $24,400. The entered lease costs $30,800. Purchase is $6,400 lower on total cash and about $2,412 lower on present cost at the selected 6% effective annual rate.
For the Auto Detailing case, compare the same vehicle service, operating obligations and horizon. A purchase may have lower total cost while needing more opening cash. Check the opening funding balance and contract terms before choosing it.
Definitions and sources
These references support definitions and calculation boundaries, not the selected amounts. Worked examples below use the hypothetical arithmetic inputs. A selected business preset has its own roster, cost allocation and evidence; its results can differ without a formula error.
- Life-cycle cost timing and present value — National Institute of Standards and Technology. Chapters 2–4 support a common study period, consistent discount/dollar basis, present-value timing and residual value. Federal energy-program requirements and rates are not applied to this equipment example. Accessed October 4, 2026.
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Review startup uses, staffing, annual results and input evidence alongside the relevant worksheets. A single calculation does not replace local quotes or a dated cash schedule.
Read the Auto Detailing Business operating case →Check the input evidence and limits →
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