Buying and leasing represent two different cash-outlay patterns for the same equipment — this compares them on a simple net-cost basis.
How it works
The purchase price minus the expected resale (residual) value gives the net cost to buy. The monthly lease payment times the lease term gives the total cost to lease — comparing the two shows which option costs less in total cash outlay.
What this does not include
This doesn’t include financing costs on a purchase (interest if buying with a loan), tax treatment differences (depreciation deductions for owned equipment vs. lease payment deductions), or the flexibility value of leasing (easier upgrades, no disposal responsibility) — all real factors beyond pure cash outlay.
How to use this calculator
- Enter the purchase price, expected residual value, monthly lease payment, and lease term.
Frequently asked questions
Why would a business lease instead of buy, even if buying is cheaper?
Leasing preserves capital and credit lines, offers easier equipment upgrades at the end of the term, and shifts obsolescence and disposal risk to the lessor — value beyond the pure total-cost comparison.
Does this account for tax deductions?
No — Section 179 and bonus depreciation can make buying more tax-advantaged than the raw cash-outlay comparison suggests; this site’s separate section-179 and bonus-depreciation calculators cover those deductions.
What if the residual value is uncertain?
The buy-cost comparison is only as reliable as the residual value estimate — a conservative (lower) estimate gives a more cautious view of the buy option’s true net cost.
