Lease vs Buy a Phone: Which Costs Less in 24 Months?

How leasing compares with buying

On the defaults — a $1,000.00 phone, a $35.00-a-month lease, a 24-month term, and a $350.00 resale value — the lease total is $840.00 ($35.00 × 24), the buy net is $650.00 ($1,000.00 − $350.00), the gap is $190.00, and buying wins by $190.00. Buying’s effective monthly cost is $27.08 a month ($650.00 ÷ 24), less than the $35.00 lease payment.

Five things about the model are worth stating plainly. First, the lease total is the monthly lease payment times the term — $35.00 × 24 = $840.00. Second, the buy net is the phone price minus the resale value — $1,000.00 − $350.00 = $650.00. Third, the gap is the lease total minus the buy net — $840.00 − $650.00 = $190.00 — and a positive gap means buying wins. Fourth, buying’s effective monthly cost is $650.00 ÷ 24 = $27.08 a month, which is why the $35.00 lease payment looks cheaper than it is. And fifth, this ignores the phone’s condition (a cracked screen cuts the resale value), carrier plan costs (the same plan either way), insurance, taxes, and upgrade fees; the resale value is your guess at what the phone is worth at the end of the term — real resale prices fall faster in the first year; all listed in Accuracy & limitations.

This calculator is part of the X vs Y comparisons library — the same compare-both-sides format as the rent vs buy and 15-year vs 30-year mortgage calculators.

The worked example, line by line

Setup: $1,000.00 phone, $35.00 a month lease, 24 months, $350.00 resale.

Line 1 — the lease side. The lease total is $35.00 × 24 = $840.00.

Line 2 — the buy side. The buy net is $1,000.00 − $350.00 = $650.00.

Line 3 — the gap. The gap is $840.00 − $650.00 = $190.00 — positive, so buying wins by $190.00.

Line 4 — the effective monthly cost. Buying’s effective monthly cost is $650.00 ÷ 24 = $27.08 a month, against the $35.00 lease payment.

Every branch, checked

Lease $25/month: Phone $1,000.00, lease $25.00/month, 24 months, resale $350.00: lease total $600.00, buy net $650.00, gap -$50.00 (leasing wins by $50.00), buying’s effective monthly cost $27.08 — A cheaper lease flips the answer — $600.00 of lease payments beats a $650.00 buy net.

Resale $500: Phone $1,000.00, lease $35.00/month, 24 months, resale $500.00: lease total $840.00, buy net $500.00, gap $340.00 (buying wins by $340.00), buying’s effective monthly cost $20.83 — A phone that holds its value makes buying a clear winner — the buy net falls to $500.00.

Resale $100: Phone $1,000.00, lease $35.00/month, 24 months, resale $100.00: lease total $840.00, buy net $900.00, gap -$60.00 (leasing wins by $60.00), buying’s effective monthly cost $37.50 — A phone that loses almost all its value makes leasing win — the buy net is $900.00 against $840.00 of lease payments.

Term 12 months: Phone $1,000.00, lease $35.00/month, 12 months, resale $350.00: lease total $420.00, buy net $650.00, gap -$230.00 (leasing wins by $230.00), buying’s effective monthly cost $54.17 — Short terms favour leasing — 12 months of lease payments are only $420.00 against a $650.00 buy net.

Phone $1,200, lease $45/month: Phone $1,200.00, lease $45.00/month, 24 months, resale $350.00: lease total $1,080.00, buy net $850.00, gap $230.00 (buying wins by $230.00), buying’s effective monthly cost $35.42 — A pricier phone on a pricier lease still ends with buying ahead — $1,080.00 of lease payments against an $850.00 buy net.

Term 36 months: Phone $1,000.00, lease $35.00/month, 36 months, resale $350.00: lease total $1,260.00, buy net $650.00, gap $610.00 (buying wins by $610.00), buying’s effective monthly cost $18.06 — Long terms favour buying — 36 months of lease payments reach $1,260.00 while the buy net stays $650.00.

The reverses, worked backwards

Monthly lease payment for an exact tie: $27.08 — the exact lease payment is 27.0833. At the displayed $27.08 the lease total is $649.92 and the gap is −$0.08 — buying wins by eight cents, effectively a tie. $27.09 gives a lease total of $650.16 (leasing wins by $0.16); $27.07 gives $649.68. The star is DOLLARS.

Resale value for an exact tie: $160.00 — the exact resale is 160.0000. At $160.00 the buy net is $840.00 and the gap is $0.00 — an exact tie. $159.00 gives a buy net of $841.00 (leasing wins by $1.00); $161.00 gives $839.00 (buying wins by $1.00). The star is DOLLARS.

Phone price for an exact tie: $1,190.00 — the exact price is 1190.0000. At $1,190.00 the buy net is $840.00 and the gap is $0.00 — an exact tie. $1,189.00 gives a buy net of $839.00 (buying wins by $1.00); $1,191.00 gives $841.00 (leasing wins by $1.00). The star is DOLLARS.

Term where the winner flips: 18 months is the longest term where leasing still wins (lease $630.00 vs buy net $650.00, leasing by $20.00); 19 months is the shortest term where buying wins (lease $665.00, buying by $15.00). The flip happens between 18 and 19 months — 17 months gives a lease total of $595.00 (leasing by $55.00). The star is MONTHS.

Monthly lease payment for buying to win by exactly $100.00: $31.25 — the exact lease payment is 31.2500. At $31.25 the lease total is $750.00 and the gap is $100.00. $31.24 gives a lease total of $749.76 (buying wins by $99.76); $31.26 gives $750.24 (buying wins by $100.24). The star is DOLLARS.

Resale value for leasing to win by exactly $50.00: $110.00 — the exact resale is 110.0000. At $110.00 the buy net is $890.00 and the gap is −$50.00. $109.00 gives a buy net of $891.00 (leasing wins by $51.00); $111.00 gives $889.00 (leasing wins by $49.00). The star is DOLLARS.

What the defaults assume

The defaults are a $1,000.00 phone, a $35.00-a-month lease, a 24-month term, and a $350.00 resale value — lease total $840.00, buy net $650.00, buying wins by $190.00. With a $25.00 lease, Phone $1,000.00, lease $25.00/month, 24 months, resale $350.00: lease total $600.00, buy net $650.00, gap -$50.00 (leasing wins by $50.00), buying’s effective monthly cost $27.08 — leasing wins by $50.00. With a $500.00 resale, Phone $1,000.00, lease $35.00/month, 24 months, resale $500.00: lease total $840.00, buy net $500.00, gap $340.00 (buying wins by $340.00), buying’s effective monthly cost $20.83 — buying wins by $340.00. With a $100.00 resale, Phone $1,000.00, lease $35.00/month, 24 months, resale $100.00: lease total $840.00, buy net $900.00, gap -$60.00 (leasing wins by $60.00), buying’s effective monthly cost $37.50 — leasing wins by $60.00. With a 12-month term, Phone $1,000.00, lease $35.00/month, 12 months, resale $350.00: lease total $420.00, buy net $650.00, gap -$230.00 (leasing wins by $230.00), buying’s effective monthly cost $54.17 — leasing wins by $230.00. With a $1,200.00 phone on a $45.00 lease, Phone $1,200.00, lease $45.00/month, 24 months, resale $350.00: lease total $1,080.00, buy net $850.00, gap $230.00 (buying wins by $230.00), buying’s effective monthly cost $35.42 — buying wins by $230.00. With a 36-month term, Phone $1,000.00, lease $35.00/month, 36 months, resale $350.00: lease total $1,260.00, buy net $650.00, gap $610.00 (buying wins by $610.00), buying’s effective monthly cost $18.06 — buying wins by $610.00. With a $0.00 lease, Phone $1,000.00, lease $0.00/month, 24 months, resale $350.00: lease total $0.00, buy net $650.00, gap -$650.00 (leasing wins by $650.00), buying’s effective monthly cost $27.08 — a free lease always wins. With a $0.00 resale, Phone $1,000.00, lease $35.00/month, 24 months, resale $0.00: lease total $840.00, buy net $1,000.00, gap -$160.00 (leasing wins by $160.00), buying’s effective monthly cost $41.67 — leasing wins by $160.00. With a $1,000.00 resale, Phone $1,000.00, lease $35.00/month, 24 months, resale $1,000.00: lease total $840.00, buy net $0.00, gap $840.00 (buying wins by $840.00), buying’s effective monthly cost $0.00 — buying wins by $840.00. With a 1-month term, Phone $1,000.00, lease $35.00/month, 1 months, resale $350.00: lease total $35.00, buy net $650.00, gap -$615.00 (leasing wins by $615.00), buying’s effective monthly cost $650.00 — leasing wins by $615.00. With a $100.00 lease, Phone $1,000.00, lease $100.00/month, 24 months, resale $350.00: lease total $2,400.00, buy net $650.00, gap $1,750.00 (buying wins by $1,750.00), buying’s effective monthly cost $27.08 — buying wins by $1,750.00. With a $0.00 phone, Phone $0.00, lease $35.00/month, 24 months, resale $350.00: lease total $840.00, buy net -$350.00, gap $1,190.00 (buying wins by $1,190.00), buying’s effective monthly cost -$14.58 — buying wins by $1,190.00, because a negative buy net means you come out ahead.

Output · formula · meaning

Who uses this

• The shopper offered a $35.00-a-month lease: they learn the lease costs $840.00 over 24 months while buying costs $650.00 net — and they check the $27.08 reverse to see the lease payment that would tie the two.
• The owner who keeps phones for three years: they learn buying wins by $610.00 at 36 months — and they check the 18-month reverse to see the term where the winner flips.
• The yearly upgrader: they learn leasing wins by $230.00 at 12 months — and they check the $160.00 reverse to see the resale value that would tie the two.
• The bargain hunter with a $1,200.00 phone: they learn buying wins by $230.00 even on the pricier phone — and they check the $110.00 reverse to see the resale value that would make leasing win by $50.00.

Accuracy & limitations

The math is first-principles: the lease total is the monthly lease payment times the term, the buy net is the phone price minus the resale value, the gap is the lease total minus the buy net, and each figure is rounded to cents half-up. The winner is decided from the rounded gap; a rounded gap of exactly $0.00 is a tie. What the model cannot do is price YOUR phone’s resale: it ignores the phone’s condition (a cracked screen cuts the resale value), carrier plan costs (the same plan either way), insurance, taxes, and upgrade fees; the resale value is your guess at what the phone is worth at the end of the term — real resale prices fall faster in the first year; and it assumes an upfront fee of $0 (add one to the lease total if your lease has one). Use it to find the term where the winner flips — then check real resale listings for your phone before you decide.

Frequently asked questions