Lease vs Buy Equipment: Total Cost Comparison Tool

What does buying winning by $18,500.00 mean?

It means buying the machine costs $18,500.00 less than leasing it over the same 60 months — $47,500.00 against $66,000.00. The machine is worth $10,000.00 at the end and costs $7,500.00 of maintenance over 5 years, so the buy total is less than the buy price itself. The lease has no resale and no maintenance to pay, but $1,100.00 a month for 60 months is $66,000.00, and there is nothing left at the end. The difference is the lease total minus the buy total — a positive difference means buying wins, a negative one means leasing wins — and the verdict is the same number in words.

Three things to check before you trust the number

The resale is the whole story on the defaults. Without the $10,000.00 resale the buy total would be $57,500.00 and buying would win by only $8,500.00. If the machine is worth nothing at the end, the answer is much closer — check the resale before you trust the verdict.

The lease payment has to fall a long way to matter. The lease would have to fall to $791.66 a month for leasing to win — $308.34 a month less than the default. At $900.00 a month buying still wins by $6,500.00, and at $800.00 a month it still wins by $500.00. A small lease discount does not flip it.

The lease term has to be short to flip it. At 43 months leasing wins by $200.00, and at 44 months buying wins by $900.00. A five-year lease is a long time to pay $1,100.00 a month for a machine you never own.

Worked example

On the defaults: buy price $50,000.00; useful life 5 years; resale $10,000.00; maintenance $1,500.00 a year; lease $1,100.00 a month; lease term 60 months.

1. Buy total: $50,000.00 + 5 × $1,500.00 − $10,000.00 = $47,500.00.
2. Lease total: $1,100.00 × 60 = $66,000.00.
3. Difference: $66,000.00 − $47,500.00 = $18,500.00 — buying wins.
4. Buy monthly equivalent: $47,500.00 ÷ 60 = $791.67 a month (unrounded 791.666667).
5. Break-even lease payment: $791.67 a month — the lease payment at which the two totals are equal.
6. Largest lease payment for leasing to still win: $791.66 a month — at $791.66 leasing wins by $0.40, and at $791.67 buying wins by $0.20.

Every branch, checked

• Buy price $40,000: Buy price $40,000: Buy $37,500.00; lease $66,000.00 — Buy wins by $28,500.00. A $10,000 cheaper machine cuts the buy total by exactly $10,000, and buying wins by $28,500.00.
• Buy price $60,000: Buy price $60,000: Buy $57,500.00; lease $66,000.00 — Buy wins by $8,500.00. A $10,000 dearer machine lifts the buy total by exactly $10,000, and buying wins by only $8,500.00.
• Useful life 7 years: Useful life 7 years: Buy $50,500.00; lease $66,000.00 — Buy wins by $15,500.00. Two more years of maintenance, and buying still wins by $15,500.00.
• Useful life 3 years: Useful life 3 years: Buy $44,500.00; lease $66,000.00 — Buy wins by $21,500.00. Two fewer years of maintenance, and buying wins by $21,500.00.
• Resale $20,000: Resale $20,000: Buy $37,500.00; lease $66,000.00 — Buy wins by $28,500.00. A machine worth twice as much at the end, and buying wins by $28,500.00.
• Resale $0: Resale $0: Buy $57,500.00; lease $66,000.00 — Buy wins by $8,500.00. A machine worth nothing at the end, and buying wins by only $8,500.00.
• Maintenance $3,000 a year: Maintenance $3,000 a year: Buy $55,000.00; lease $66,000.00 — Buy wins by $11,000.00. Twice the maintenance, and buying still wins by $11,000.00.
• Lease $900 a month: Lease $900 a month: Buy $47,500.00; lease $54,000.00 — Buy wins by $6,500.00. A cheaper lease, and buying wins by only $6,500.00.
• Lease $800 a month: Lease $800 a month: Buy $47,500.00; lease $48,000.00 — Buy wins by $500.00. A lease $300 a month cheaper, and buying wins by only $500.00.
• Lease $700 a month: Lease $700 a month: Buy $47,500.00; lease $42,000.00 — Lease wins by $5,500.00. A lease $400 a month cheaper, and leasing wins by $5,500.00 — the only branch where leasing wins.

The reverses, worked backwards

• Largest lease payment for leasing to still win: $791.66 a month — at $791.66 a month the figures are Buy $47,500.00; lease $47,499.60 — Lease wins by $0.40 (unrounded 0.400000); at the lower neighbor the figures are Buy $47,500.00; lease $47,499.00 — Lease wins by $1.00 (unrounded 1.000000); at the upper neighbor the figures are Buy $47,500.00; lease $47,500.20 — Buy wins by $0.20 (unrounded 0.200000) — verdict: STEP.
• Smallest buy price for leasing to win: $68,501 — at $68,501 the figures are Buy $66,001.00; lease $66,000.00 — Lease wins by $1.00 (unrounded 1.000000); at the lower neighbor the figures are Buy $66,000.00; lease $66,000.00 — exact tie; at the upper neighbor the figures are Buy $66,002.00; lease $66,000.00 — Lease wins by $2.00 (unrounded 2.000000) — verdict: STEP.
• Largest maintenance for buying to still win: $5,199 a year — at $5,199 a year the figures are Buy $65,995.00; lease $66,000.00 — Buy wins by $5.00 (unrounded 5.000000); at the lower neighbor the figures are Buy $65,990.00; lease $66,000.00 — Buy wins by $10.00 (unrounded 10.000000); at the upper neighbor the figures are Buy $66,000.00; lease $66,000.00 — exact tie — verdict: STEP.
• Largest lease term for leasing to still win: 43 months — at 43 months the figures are Buy $47,500.00; lease $47,300.00 — Lease wins by $200.00 (unrounded 200.000000); at the lower neighbor the figures are Buy $47,500.00; lease $46,200.00 — Lease wins by $1,300.00 (unrounded 1300.000000); at the upper neighbor the figures are Buy $47,500.00; lease $48,400.00 — Buy wins by $900.00 (unrounded 900.000000) — verdict: STEP.
• Smallest buy price for buying to win by $20,000: $48,500 — at $48,500 the figures are Buy $46,000.00; lease $66,000.00 — Buy wins by $20,000.00 (unrounded 20000.000000); at the lower neighbor the figures are Buy $45,999.00; lease $66,000.00 — Buy wins by $20,001.00 (unrounded 20001.000000); at the upper neighbor the figures are Buy $46,001.00; lease $66,000.00 — Buy wins by $19,999.00 (unrounded 19999.000000) — verdict: STEP.
• Largest useful life for buying to still win: 17 years — at 17 years the figures are Buy $65,500.00; lease $66,000.00 — Buy wins by $500.00 (unrounded 500.000000); at the lower neighbor the figures are Buy $64,000.00; lease $66,000.00 — Buy wins by $2,000.00 (unrounded 2000.000000); at the upper neighbor the figures are Buy $67,000.00; lease $66,000.00 — Lease wins by $1,000.00 (unrounded 1000.000000) — verdict: STEP.

What the defaults assume

The defaults are one $50,000 machine with a 5-year useful life, a $10,000 resale value and $1,500 a year of maintenance against a $1,100 a month lease for 60 months. They are a starting point, not a verdict on leasing: a machine with no resale value, a short useful life or very high maintenance can make leasing win, and a cheap lease can too. Change the six numbers to the machine and the lease you are actually comparing and the calculator recomputes instantly.

These notes repeat in every explainer section because this page is built to be read start to finish: the defaults are one machine and one lease, not a standard; the resale is the whole story on the defaults; the lease payment has to fall a long way to matter; and the lease term has to be short to flip it.

Output · formula · meaning

Who uses this

• A small business owner deciding whether to buy or lease a machine and wanting the whole-period cost, not just the monthly payment.
• A contractor comparing a leased excavator against a bought one over the same years.
• A workshop manager who needs the break-even lease payment before negotiating with the leasing company.
• A bookkeeper checking whether a client’s lease is cheaper than buying the same equipment outright.

Accuracy & limitations

The calculator does the arithmetic exactly — buy price plus maintenance times useful life minus resale value, against lease payment times lease term, then the difference — and every figure on this page is checked against an independent model. What it does not include is everything else a machine costs: tax, insurance, downtime, repairs beyond routine maintenance, and the cost of capital — buying ties up $50,000 that could earn interest elsewhere. A lease can also include maintenance, which this calculator counts separately, and a lease can end early with penalties the calculator does not model. The resale value is a guess until the machine is sold — check it before you trust the verdict.

Cite this calculator

Total cost of buying = buy price + maintenance × useful life − resale value; total cost of leasing = lease payment × lease term; difference = lease total − buy total. On the defaults — buy $50,000.00, life 5 years, resale $10,000.00, maintenance $1,500.00 a year, lease $1,100.00 a month, 60 months — buying costs $47,500.00 and leasing costs $66,000.00: buying wins by $18,500.00. Largest lease payment for leasing to still win: $791.66 a month. Smallest buy price for leasing to win: $68,501. Largest maintenance for buying to still win: $5,199 a year. Largest lease term for leasing to still win: 43 months. Smallest buy price for buying to win by $20,000: $48,500. Largest useful life for buying to still win: 17 years. Source: Bright Side Kit, brightoolbox.com.

Frequently asked questions