Lease vs Buy Calculator & Formula

The Lease vs. Buy Calculator helps you compare the total costs of leasing versus purchasing a vehicle or equipment over a specified term. This tool provides a clear breakdown of costs, empowering you to make an informed decision based on your financial situation and preferences.

Why Use This Calculator?

This calculator is ideal for:

• Cost Comparison: Understand the total financial implications of leasing vs. buying.
• Budget Planning: Identify which option fits your financial situation and long-term goals.
• Decision Support: Make an informed decision based on clear, quantitative data.

Real-Life Example

Let’s compare the costs of leasing versus buying with the following details:

• Lease Option:
• Monthly Lease Payment: $350
• Lease Term: 36 months
• Down Payment: $1,000
• Additional Fees: $500
• Buy Option:
• Purchase Price: $25,000
• Loan Term: 60 months
• Loan Interest Rate: 4.5%
• Down Payment: $2,000

Step 1: Calculate the total lease cost:

$\mathrm{Total Lease Cost}=(350\times 36)+1000+500=\mathrm{14,100}$

Step 2: Calculate the total buy cost:

Loan Monthly Payment = \( \frac{23,000 \times 0.00375}{1 – (1 + 0.00375)^{-60}} \approx 426.30 \)

$\mathrm{Total Buy Cost}=(426.30\times 60)+2000=\mathrm{27,578}$

Result: The total lease cost is $14,100, and the total buy cost is $27,578. In this scenario, leasing is the cheaper option.

Benchmark Indicators

Here are typical benchmarks for choosing between leasing and buying: