Equipment Lease vs Buy Calculator

Lease vs. Buy: A Direct Cost Comparison

Equipment decisions — cameras, computers, vehicles, tools — carry both financial and operational implications for small businesses and self-employed workers. Leasing preserves cash flow and often bundles maintenance; buying builds an asset and usually costs less across the full equipment lifespan. This tool quantifies the gap between the two on the inputs provided.

What People Often Overlook

The sticker price of equipment is rarely the whole story. Leasing costs accumulate quickly over two or three years, and the residual value — what the equipment is worth once the lease ends — only counts on the buy side. For equipment that holds its value well (certain professional cameras, high-spec laptops, well-maintained vehicles), that residual figure often tips the comparison toward buying.

Timing and Cash Flow Matter Too

Upfront cash impact and long-term total cost pull in different directions. A large purchase can strain cash flow in a slow month, while smaller lease payments feel manageable but accumulate to a larger total over the term. Neither option is inherently better — What works depends on how predictable cash flow is, how long the equipment will be used, and how much it is expected to be worth at the end.

Run it with sensible defaults

Using equipment purchase price 2,100, monthly lease payment 100, lease term 3 years, residual value 500, the calculation works out to Buy — total lease cost of 3,600 versus net buy cost of 1,600 (2,100 minus 500 residual), a 2,000 saving over the term. Adjust any input and the output recalculates instantly.

The levers in this calculation

The inputs are Equipment Purchase Price, Monthly Lease Payment, Lease Term, and Residual Value After Term. Lease term and monthly payment combine into the total lease side; purchase price and residual value combine into the net buy side. A small change in residual value often flips the winner because residual only counts on the buy side — checking how the answer shifts as residual goes up or down is usually informative.

How the math works

Total lease cost equals monthly lease payment × 12 × lease years. Net buy cost equals purchase price minus residual value (resale value at the end of the same term). The winner is whichever side is lower; the saving is the absolute gap. The full formula sits in the panel below and can be retraced by hand to verify any output.

What this calculation does not capture

The comparison covers cash outlay only. Financing interest on a financed-purchase route, maintenance costs (often bundled into leases but not into ownership), insurance, opportunity cost of capital tied up in equipment, and tax treatment of lease payments versus depreciation all sit outside this calculation. The residual value input assumes the equipment is sold at the end of the term on the buy path; lease terms are assumed to end with the equipment returned rather than purchased outright.