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Comparison Summary
Total Lease Cost: -
Total Buy Cost: -
Difference (Savings): -
📊 Lease vs. Buy Cost Comparison Chart
This visual chart compares the cumulative cost of leasing versus buying the selected asset over time, helping you identify the break-even point or long-term savings.
📘 Overview: Lease vs. Buy Cost Calculator
Deciding whether to lease or buy a car, equipment, or real estate? This calculator analyzes both options to help you make a smart, financially sound decision based on your budget, goals, and timeframe.
This tool calculates:
- 💸 Total lease cost based on monthly payments and lease term
- 🏦 Total buying cost including loan payments, down payment, and additional expenses
- 📈 Break-even comparison to see which option is cheaper over time
Leasing may seem cheaper in the short term, but buying often provides long-term ownership value. Use this tool to model both scenarios with real numbers.
📐 Formulas & Financial Methodology
🔁 Lease Option Formula
Total Lease Cost = (Monthly Lease Payment × Lease Duration) + Residual Value
If the residual value (i.e., the asset’s value after lease) is unknown or not entered, it's assumed to be zero.
💰 Buy Option Formula
Step 1 – Down Payment:
Down Payment = max(Asset Price − Loan Amount, 0)
Step 2 – Monthly Loan Payment:
M = L × [r(1 + r)n] / [(1 + r)n − 1]
Where:
- M = monthly loan payment
- L = loan amount
- r = monthly interest rate = (annual interest ÷ 12 ÷ 100)
- n = loan term in months
Step 3 – Total Buy Cost:
Total Buy Cost = Down Payment + (Monthly Loan Payment × Loan Term) + (Additional Monthly Costs × Loan Term)
🧪 Example Calculation: Lease vs. Buy
Scenario: You’re evaluating whether to lease or buy a €30,000 car.
- Lease: €350/month for 36 months, no residual value
- Buy: €5,000 down payment, €25,000 loan at 5% annual interest, 60-month term, €100/month additional ownership costs (e.g., insurance, maintenance)
Total Lease Cost: € 12600
Total Buy Cost: € 39306.85
Difference: € 26706.85 (Lease is cheaper)
The buy scenario uses the amortization formula to compute monthly payments and adds all additional costs.
The tool calculates both totals and displays a detailed comparison with visual output.
💡 Use Cases for This Calculator
- 🚗 Choosing between leasing or buying a new vehicle
- 🏢 Deciding whether to lease or purchase commercial equipment
- 🏠 Evaluating homeownership versus renting with mortgage
- 💼 Comparing investment value of ownership vs. monthly leasing fees
- 📉 Budgeting long-term costs before making large purchases
❓ Frequently Asked Questions
What if I don't enter a residual value for the lease?
If no residual value is entered, the calculator assumes it is €0 — meaning you return the asset with no resale or retained value.
How is the monthly loan payment calculated?
It uses the amortized loan payment formula based on your loan amount, interest rate, and term. This ensures accurate comparison with fixed lease payments.
Does the tool include taxes or registration fees?
No. These are often region-specific. For maximum accuracy, you can add them to the “Additional Monthly Costs” field if needed.
Can I use this for real estate purchases?
Yes. The calculator works for homes or apartments as well. Just ensure you input the appropriate loan amounts, duration, and ownership-related costs.
Is leasing always more expensive?
Not necessarily. Leasing may be cheaper in the short term or if you frequently upgrade assets. Buying usually wins in the long run, especially for high-value items.
What if I pay the loan early?
This calculator assumes full-term payment. If you intend to prepay, you may save on interest. Adjust the term to match your expected payoff period.
Can I factor in depreciation?
While not directly modeled, you can use the residual value in lease or ownership resale assumptions to estimate net value over time.
Does this tool support different currencies?
Yes. Use the currency selector to switch between $, €, £, ₹, and others. The logic and calculations remain unchanged.
Is this calculator suitable for business use?
Absolutely. It’s useful for small business owners or financial managers deciding how to acquire fleet vehicles, office equipment, or tech infrastructure.