The lease versus buy decision is one of the most common financial calculations for businesses and individuals. Whether you are evaluating a company vehicle, equipment, or a consumer purchase, the math often points in a different direction than intuition. This calculator cuts through the complexity and shows the true total cost of each path.
What leasing actually costs. A lease payment looks lower than a loan payment, but appearances deceive. A lease pays for depreciation plus the lessor's financing cost and profit. At the end of the lease you have nothing to show for the payments. The total cost of a lease typically exceeds the cost of buying and keeping the same asset beyond the loan payoff date.
The case for leasing. Leasing makes sense in specific situations. If the asset depreciates rapidly and you need the latest version every few years — vehicles in high-mileage commercial use, certain technology equipment — a lease limits your depreciation exposure. Lease payments may be fully deductible as a business expense in the year paid. For businesses that need predictable monthly costs and maximum flexibility, leasing often wins.
The case for buying. If you plan to keep an asset for longer than the lease term, buying almost always wins on total cost. Once the loan is paid off, you own the asset outright and your cost drops to maintenance only. For vehicles, ownership past loan payoff can represent two to four years of payment-free use. For equipment with long useful lives, the owned asset appears on your balance sheet and supports borrowing.
Hidden costs of leasing. Lease agreements typically include mileage caps, excess wear charges, disposition fees at lease end, and early termination penalties that can cost thousands. The calculator compares deals run to their stated end — early termination changes the math significantly. Always read the full lease agreement before signing.
Residual value and buyout options. Many leases include an option to purchase the asset at lease end for a pre-agreed residual value. If the asset is worth more than the residual at lease end, exercising the buyout is a good deal. If it is worth less, you can walk away. Enter the buyout amount in the calculator to model the total cost if you plan to keep the asset after the lease ends.