General Finance
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Loan vs Lease Calculator
Compare the total cost of buying on loan against leasing instead. Adjust any input below and your results update instantly.
Understanding loan vs lease
The concept, the motivation, and what to watch out for.
What actually decides loan vs lease?
Buying on loan builds ownership in a depreciating asset, but ties up a down payment and locks in a fixed EMI. Leasing avoids all of that, but the money not spent on a down payment only helps if it's actually invested — and you never own the asset at the end.
This calculator compares both paths side by side at the end of your term — a buyer's remaining equity in the asset against a leaser's invested value: their skipped down payment plus whatever monthly surplus they'd have compared to a buyer's EMI.
A depreciating asset works against the buyer
Unlike a home or an investment, most financed assets lose value every year — so a buyer's equity is a shrinking asset minus a shrinking loan balance, not a growing one.
Leasing's real advantage is the freed-up cash
A lease's lower monthly payment (and lack of a down payment) only pays off if that difference is genuinely invested — not simply spent elsewhere.
How this calculator helps
Enter your numbers for both paths — the buyer's equity and the leaser's invested value update instantly, side by side.
Compare buying and leasing
Fill in the starred fields on the left — your results update instantly on the right.
Your details
≈ ₹10.00 L
e.g. ₹10,00,000 for a car or equipment
e.g. 20% down payment
e.g. 9% for a vehicle or equipment loan
e.g. ₹18,000 a month
e.g. 5 years
e.g. 15% a year
e.g. 10% for a balanced portfolio
How these compare
vs. typical India long-term ranges
Asset depreciation: 15%
Typical vehicle/equipment depreciation: 12–18%/year
Investment return: 10%
India long-term equity avg: 10–13%
These are example numbers. Edit any input on the left to see your own.
Buying leaves you better off by
₹2.23 L
over 5 years
Buying: equity
₹4.44 L
Leasing: invested value
₹2.21 L
Buying comes out ahead by ₹2.23 L over 5 years, at these numbers.
Value over time: buying vs. leasing
Buying (asset equity)Leasing (invested value)
Each line shows the value building up under that path alone — not your overall net worth, just what this one decision is worth so far.
Why does buying dip before it climbs? In year 1, your equity briefly falls to ₹1.83 L — early EMIs pay mostly interest, so loan paydown can't yet keep up with depreciation. It recovers past your starting equity by year 2 as amortization accelerates and depreciation's rupee impact shrinks.
Year-by-year comparison
Shows which option is ahead each year, and by how much the trailing option compares.
YearBuying: equityLeasing: invested valueStatus
1₹1.83 L₹2.03 L
Leasing ahead
Buying at 90% of the other
2₹2.00 L₹2.07 L
Leasing ahead
Buying at 97% of the other
3₹2.51 L₹2.11 L
Buying ahead
Leasing at 84% of the other
4₹3.32 L₹2.16 L
Buying ahead
Leasing at 65% of the other
5₹4.44 L₹2.21 L
Buying ahead
Leasing at 50% of the other
Compare scenarios
See how investment returns or asset depreciation would shift the outcome.
Your plan
15% deprec · 10% returns
₹2.23 L
Gap (buying equity − leasing value)
Baseline
Returns 12%
15% deprec · 12% returns
₹1.94 L
Gap (buying equity − leasing value)
-₹28,380
Depreciation 17%
17% deprec · 10% returns
₹1.73 L
Gap (buying equity − leasing value)
-₹49,801
Worked example, using your numbers
A step-by-step walkthrough of how each path builds value.
Step 1 · Down payment invested
If leasing, investing your ₹2.00 L down payment instead grows to
₹3.22 L
Step 2 · Buyer's equity
After 5 years, with your loan paid off, your asset is worth
₹4.44 L
Step 3 · Final comparison
Leasing and investing the difference instead grows to
₹2.21 L
✓
Buying comes out ahead by ₹2.23 L over 5 years — ₹4.44 L in asset equity vs ₹2.21 L invested.
Personalised insights
What your numbers reveal, and what changing them would do.
Buying leaves you ₹2.23 L better off over 5 years
Buying leaves you with ₹4.44 L in asset equity, while leasing and investing the difference grows to ₹2.21 L.
Your ₹2.00 L down payment alone, invested, grows to ₹3.22 L
That's before counting any monthly savings a leaser invests on top — the down payment's opportunity cost is often the single biggest factor in this comparison.
A 12% investment return would move the gap to ₹1.94 L
Even without anything else changing, a higher return leasers could earn elsewhere shifts the comparison from ₹2.23 L toward leasing.
A 17% depreciation rate would move the gap to ₹1.73 L
Faster depreciation erodes a buyer's equity, shifting the comparison from ₹2.23 L toward leasing.
How this is calculated
Every step of the math behind your result, shown in the open.
A buyer's equity in the asset
V_t = asset value at year t, L_t = remaining loan balance, E_buy = buyer's equity
A buyer's equity is simply what their asset is worth (V_t) minus whatever they still owe on it (L_t).
Example: ₹2.00 L invested at 10% for 5 years → ₹3.22 L
A leaser's invested value grows monthly
C_m = leaser's invested value after month m, r_m = monthly investment return, EMI = buyer's instalment, P = fixed lease payment
Each month, a leaser's invested value grows at the investment return, plus whatever they didn't spend that month compared to a buyer's EMI — usually positive, since lease payments are typically lower.
Example: ₹16,607 EMI − ₹18,000 lease payment → -₹1,393 invested each month
An asset's value shrinks every year
V_0 = starting asset price, d = depreciation rate, t = years, V_t = value after t years
The asset's value compounds downward at the depreciation rate (d) — the opposite of an appreciating asset like a home.
Example: ₹10.00 L depreciating 15%/year for 5 years → ₹4.44 L
Assumptions
- The lease payment stays fixed for the whole term, unlike rent, which can escalate.
- No lease deposit is assumed, since most leases require little to no money down.
- Insurance and maintenance are assumed roughly comparable either way, so they're left out.
- Usage limits (e.g. vehicle mileage) and end-of-lease fees aren't included — check your specific lease terms.
- Figures are indicative and pre-tax — not financial advice.
Did you know?
A few facts behind the loan vs lease decision.
-15%
Many financed assets depreciate fast
New vehicles, for instance, often lose 15% or more of their value in the first year alone — a key reason leasing appeals to people who prefer not to hold a rapidly depreciating asset.
Fixed
A lease payment doesn't escalate mid-term
Unlike rent, which can rise at renewal, a lease payment is locked in for the entire contract — one less variable to plan around.
Cost
The down payment's opportunity cost applies here too
Just like in a rent-vs-buy decision, money not spent on a down payment can be invested from day one — often a bigger factor than the sticker price gap.
Limit
Leases usually cap how much you can use the asset
Vehicle leases, for example, typically include an annual mileage allowance, with per-kilometre charges for going over — worth checking against your actual usage.
Frequently asked questions
Straight answers to the questions we hear most about loan vs lease.
How does this calculator decide whether buying or leasing wins?
It compares each side's final position: a buyer's equity in the asset (depreciated value minus remaining loan) against a leaser's invested value (their skipped down payment plus any monthly savings versus a buyer's EMI, all invested and compounding).
Why would leasing ever come out ahead if you own nothing at the end?
Because a financed asset depreciates, a buyer's equity is often modest — while a leaser's freed-up down payment and lower monthly payment, invested consistently, can outgrow that modest equity, especially over longer terms.
Why does the buying line sometimes dip before it climbs?
Depreciation is steepest in rupee terms early on, since it's a percentage of the largest value the asset will ever have — while an amortizing loan's first EMIs pay mostly interest, barely touching principal. If depreciation outpaces that early paydown, equity briefly falls below your down payment before recovering, once amortization accelerates and depreciation's shrinking rupee impact falls behind it.
Does this account for mileage limits or end-of-lease fees?
No — many leases cap annual usage (like vehicle mileage) and charge for excess wear at the end, which aren't modeled here. Factor those into your own comparison if they're likely to apply.
Can I buy the asset at the end of a lease?
Many leases offer a buyout at a pre-agreed residual value — this calculator assumes a standard walk-away lease instead, since buyout terms vary widely by contract.
Does this include insurance or maintenance costs?
No — both are assumed roughly comparable whether you buy or lease, so they're left out to keep the comparison focused on the financing decision itself.
Is this financial advice?
No. This tool provides indicative estimates based on your assumptions. Consult a certified financial advisor before making a buy-or-lease decision.
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Learn more
Articles to go deeper on the ideas behind this calculator.
Fundamentals
Loan vs. lease: the real trade-offs
Beyond the monthly payment — ownership, usage limits, and what happens at the end.
6 min read
Fundamentals
How fast do financed assets really depreciate?
What resale data shows about the first few years of ownership.
5 min read
Strategy
The down payment's hidden opportunity cost
Why the money you don't spend on an asset matters as much as the asset itself.
5 min read