Debt & finance

Lease vs buy equipment calculator

Leasing preserves cash; buying builds an asset. The right answer depends on the residual value, your cost of capital and how long you actually keep the equipment.

Inputs

Result

Lower present-value cost

Leasing (saves 8290.08)

Present value cost of buying
USD 104,718.95
Present value cost of leasing
USD 96,428.87
Monthly cost if financed to buy
USD 2,986.21
Total lease payments
USD 116,700
Residual value retained if bought
USD 35,000
  • Residual value is the assumption that most often flips this decision — test it at plus and minus 30%.

How to use this calculator

  1. 1Enter the purchase price, financing rate and expected residual value.
  2. 2Enter the monthly lease payment and any lease-end fee.
  3. 3Set the comparison period and your discount rate.

Compare on present value, not monthly cost

A lease with a lower monthly payment can still be more expensive once you account for the asset you own at the end of a purchase. Discount both cash flow streams at your cost of capital before comparing.

Residual value is the swing factor. Equipment that holds value favours buying; assets that are obsolete in three years usually favour leasing.

The non-financial factors

Leases often bundle maintenance and replacement, which has real value for businesses without technical staff. Ownership gives flexibility to modify, sell or use the asset as loan security.

For a future sale, owned equipment adds to the asset base a buyer acquires, while lease commitments transfer as liabilities that reduce the price.

Call this tool from the API

Every calculator on this site is also an endpoint. Get a free key from the developer page and call it from your product, spreadsheet or AI agent.

curl -X POST https://utopiavalue.co/api/v1/tools/lease-vs-buy-calculator \
  -H "Authorization: Bearer $UTOPIA_API_KEY" \
  -H "Content-Type: application/json" \
  -d '{"purchasePrice":120000,"financeRatePercent":9,"residualValue":35000,"monthlyLeasePayment":2400,"leaseEndFee":1500,"ownershipMaintenance":3000,"years":4,"discountRatePercent":10,"currency":"USD"}'

Frequently asked questions

Which is better for tax?

It depends on the jurisdiction and lease type. Operating lease payments are usually deductible; purchases attract depreciation. Ask your accountant before deciding on tax grounds alone.

What discount rate should I use?

Your borrowing rate at minimum. If capital is scarce, use your internal hurdle rate instead.

Does leasing hurt my balance sheet?

Most accounting standards now bring significant leases onto the balance sheet, so the gearing benefit of leasing is smaller than it once was.