Lease vs buy is one of the oldest decisions in business and consumer finance. This calculator computes the present value of all lease payments and any buyout, giving you a single number to compare against the upfront purchase price.
Lease NPV
₹14,54,620
Today's cost of leasing
Buy − lease
₹45,380
Lease is cheaper
Total lease paid
₹17,94,000
Nominal, undiscounted
Buy vs lease - present value
Lease wins on present value
The PV of lease payments is below the purchase price - leasing preserves capital.
Tax treatment differs - operating leases for businesses are fully expensable; finance leases are treated like asset ownership. Personal car leases in India don't qualify for section 80 deductions.
Parte do conteúdo ainda aparece em inglês.
Lease vs buy is a classic capital-allocation decision that affects everything from corporate fleets to home appliances to consumer electronics. The rapid growth of car-leasing programs in India (ALD Automotive, Avis, ORIX), equipment leasing for businesses, and subscription-style consumer-goods leasing (Furlenco, Rentomojo) has made this calculation increasingly relevant for both individuals and small businesses. The fundamental question: is the cash you save upfront by leasing, plus the cost of all lease payments, less than what you'd pay to buy outright?
This calculator computes the present value of all future lease payments and any end-of-lease buyout, giving you a single number to compare against the outright purchase price. The key insight: lease comparisons must always be done in present-value terms, not totals. ₹3 lakh paid over 36 monthly installments is not the same as ₹3 lakh paid today - the monthly version is effectively cheaper because you keep your capital working. The discount rate you use to convert future payments to today's value is the lynchpin of the analysis.
Enter the asset's full purchase price (for the buy comparison).
Enter the monthly lease payment.
Set the lease tenure in years and any upfront fee or deposit.
Add the residual value - the amount you'd pay to buy the asset at the end (or 0 for an operating lease).
Set a discount rate that reflects your cost of capital.
See total lease cost and present value.
Each future lease payment is discounted back to today at the chosen rate. The residual value at the end is also discounted. Sum them along with the upfront fee to get the lease's net present value. Compare to the purchase price - whichever is lower is the cheaper option in present-value terms.
NPV(lease) = Upfront + Σ MonthlyLease/(1+r)^m + Residual/(1+r)^N
The lease NPV calculation has three components. (1) Upfront fee or security deposit paid at lease inception. (2) Stream of monthly lease payments, each discounted to today's value at the chosen rate. (3) End-of-lease residual / buyout payment (if applicable), discounted to today. Sum gives the present-value cost of leasing. Compare to the outright purchase price - whichever is lower wins in pure financial terms.
Discount rate selection matters. Use your alternative-investment return or borrowing rate, whichever is higher. For Indian consumers, this is typically 8-10% (FD/MF blend or personal loan rate). For businesses, use the weighted average cost of capital (WACC), typically 10-14% for SMEs. Higher discount rate = leases look better (future payments discount more); lower discount rate = buying looks better.
Operating lease vs Financial lease: operating leases are usage-only with no buyout (you return at lease end); financial leases include a buyout option, often nominal (₹1 in some structures, residual fair-value in others). Operating leases include maintenance and insurance in the payment; financial leases typically don't. The calculator handles both - set the residual to zero for operating leases, residual value for financial leases.
Lease NPV at 9% discount: PV of 36 × ₹35,000 ≈ ₹11.0 lakh + PV of ₹6 lakh in 3 years = ₹4.63 lakh. Total NPV ≈ ₹15.63 lakh. Slightly more than the buy option (₹15 lakh). But if you'd finance the buy with a car loan at 9% for 5 years (EMI ₹31,118), the lease's tighter cash flow and end-of-3-years exit option may still appeal. Pure financial difference is small; flexibility differs.
Lease NPV at 12% discount: PV of 60 × ₹12,000 ≈ ₹5.39 lakh. Buy: ₹5 lakh today. Buying is cheaper by ₹39,000 - but lease payments are fully tax-deductible (saving ₹15,000-20,000/year for a 25% slab business), the buy option requires upfront cash drain, and end-of-life disposal is the lessor's problem. Tax-adjusted lease can win for small businesses.
When the asset depreciates fast (cars, IT equipment), when usage is short (under 3-4 years), or when off-balance-sheet treatment matters for businesses. Also when you want to upgrade often.
Personal car leasing is still nascent. Corporate car leases are common at 24-48 month terms with monthly rates similar to a 5-year EMI but no asset ownership. Operating leases include maintenance and insurance.
Use the rate at which you could borrow (loan rate) or the rate you'd earn from investing the saved cash. For consumers in India, 8-10% is typical. For businesses, the weighted cost of capital.
For businesses - operating lease payments are fully tax-deductible as expenses. For individuals - personal car/equipment leases are usually not deductible.
The fair value of the leased asset at the end of the lease. Some leases (operating) require you to return the asset; some (financial / lease-to-own) let you buy it for the residual.
Often yes - early-termination penalties, mileage caps for cars, end-of-lease wear charges, mandatory insurance through the lessor. Read the fine print.
Indian financial products - home loans, fixed deposits, mutual funds, NPS, insurance - each carry their own quirks: monthly reducing balance vs flat-rate interest, quarterly vs monthly compounding, indexation on capital gains, the choice between the old and new tax regime. We design every finance calculator to use the formula that an Indian bank, AMC, or insurer would actually use, and to surface the assumptions in plain English so you can audit the result against your own statement.
Use this calculator alongside the EMI, SIP and inflation calculators to plan your money holistically. A standalone EMI number means little until you compare it with your in-hand salary, your existing debt-to-income ratio, and the impact of inflation on the real cost of the loan. The related-tool grid below makes it one click to chain these analyses together.
The Lease Calculator is part of the Finance suite on Online Calculator Tools, alongside 6 related calculators. All tools share the same UI patterns, the same privacy-first rendering (nothing is sent to a server), and the same commitment to showing the formula and assumptions behind every result.
