Lease-to-Own Calculator
This calculator helps you understand the total cost of a lease-to-own agreement. It calculates the total amount paid through regular lease payments and the total cost if you decide to exercise the final purchase option.
Enter the initial value of the item, the amount of each regular payment, the total number of payments, and the final purchase option price.
Enter Lease-to-Own Details
Understanding Lease-to-Own Agreements
What is Lease-to-Own?
A lease-to-own agreement allows you to rent an item for a period, with the option (but not the obligation) to purchase it later. A portion of your regular payment may or may not go towards the purchase price. If you complete all payments and pay a final "buyout" price, you own the item. If you stop payments, you typically return the item and lose the money paid.
How the Calculator Works (Basic Calculation)
This calculator performs a simple sum based on the numbers you provide:
- Total Cost (Lease Only): This is the sum of all your regular payments if you make them all but don't pay the final purchase option price.
Total Lease Cost = Regular Payment Amount × Number of Regular Payments - Total Cost (Lease + Buy): This is the total amount you will have paid if you make all regular payments and then pay the final purchase option price to own the item.
Total Lease + Buy Cost = Total Lease Cost + Final Purchase Option Price
This calculation shows the full expense under different outcomes but does not account for the time value of money or complex fee structures unless included within your specified payment amounts.
Lease-to-Own Examples
Click on an example to see the calculation:
Example 1: Sofa Lease
Scenario: Leasing a sofa with weekly payments and a final buyout.
1. Known Values: Initial Value = $800, Regular Payment = $20 (weekly), Number of Payments = 104 (2 years), Buyout Price = $150.
2. Formula (Lease Only): Total Lease Cost = Regular Payment × Number of Payments
3. Calculation (Lease Only): Total Lease Cost = $20 × 104 = $2080
4. Formula (Lease + Buy): Total Lease + Buy Cost = Total Lease Cost + Buyout Price
5. Calculation (Lease + Buy): Total Lease + Buy Cost = $2080 + $150 = $2230
6. Results: Total Lease Cost = $2080, Total Lease + Buy Cost = $2230.
Conclusion: Leasing for 2 years costs $2080. Buying the sofa costs $2230 total, significantly more than the initial $800 value.
Example 2: Laptop Lease
Scenario: Leasing a laptop with monthly payments and a minimal buyout.
1. Known Values: Initial Value = $1200, Regular Payment = $75 (monthly), Number of Payments = 18 (1.5 years), Buyout Price = $1.
2. Formula (Lease Only): Total Lease Cost = Regular Payment × Number of Payments
3. Calculation (Lease Only): Total Lease Cost = $75 × 18 = $1350
4. Formula (Lease + Buy): Total Lease + Buy Cost = Total Lease Cost + Buyout Price
5. Calculation (Lease + Buy): Total Lease + Buy Cost = $1350 + $1 = $1351
6. Results: Total Lease Cost = $1350, Total Lease + Buy Cost = $1351.
Conclusion: This laptop lease-to-own costs $1351 if you buy it, which is closer to the initial value but still higher.
Example 3: Appliance Lease
Scenario: Leasing a refrigerator with bi-weekly payments.
1. Known Values: Initial Value = $1500, Regular Payment = $40 (bi-weekly), Number of Payments = 65 (2.5 years), Buyout Price = $200.
2. Formula (Lease Only): Total Lease Cost = Regular Payment × Number of Payments
3. Calculation (Lease Only): Total Lease Cost = $40 × 65 = $2600
4. Formula (Lease + Buy): Total Lease + Buy Cost = Total Lease Cost + Buyout Price
5. Calculation (Lease + Buy): Total Lease + Buy Cost = $2600 + $200 = $2800
6. Results: Total Lease Cost = $2600, Total Lease + Buy Cost = $2800.
Conclusion: The total cost to own the refrigerator through this lease is $2800.
Example 4: TV Lease (Shorter Term)
Scenario: Leasing a TV for a shorter term with higher weekly payments.
1. Known Values: Initial Value = $600, Regular Payment = $30 (weekly), Number of Payments = 52 (1 year), Buyout Price = $100.
2. Formula (Lease Only): Total Lease Cost = Regular Payment × Number of Payments
3. Calculation (Lease Only): Total Lease Cost = $30 × 52 = $1560
4. Formula (Lease + Buy): Total Lease + Buy Cost = Total Lease Cost + Buyout Price
5. Calculation (Lease + Buy): Total Lease + Buy Cost = $1560 + $100 = $1660
6. Results: Total Lease Cost = $1560, Total Lease + Buy Cost = $1660.
Conclusion: Owning this $600 TV via this lease costs $1660 total.
Example 5: Game Console Lease
Scenario: Leasing a game console with monthly payments.
1. Known Values: Initial Value = $400, Regular Payment = $35 (monthly), Number of Payments = 12 (1 year), Buyout Price = $80.
2. Formula (Lease Only): Total Lease Cost = Regular Payment × Number of Payments
3. Calculation (Lease Only): Total Lease Cost = $35 × 12 = $420
4. Formula (Lease + Buy): Total Lease + Buy Cost = Total Lease Cost + Buyout Price
5. Calculation (Lease + Buy): Total Lease + Buy Cost = $420 + $80 = $500
6. Results: Total Lease Cost = $420, Total Lease + Buy Cost = $500.
Conclusion: In this case, the total cost to own ($500) is closer to the initial value ($400).
Example 6: Furniture Set Lease
Scenario: Leasing a living room set with weekly payments over a longer term.
1. Known Values: Initial Value = $2000, Regular Payment = $50 (weekly), Number of Payments = 156 (3 years), Buyout Price = $300.
2. Formula (Lease Only): Total Lease Cost = Regular Payment × Number of Payments
3. Calculation (Lease Only): Total Lease Cost = $50 × 156 = $7800
4. Formula (Lease + Buy): Total Lease + Buy Cost = Total Lease Cost + Buyout Price
5. Calculation (Lease + Buy): Total Lease + Buy Cost = $7800 + $300 = $8100
6. Results: Total Lease Cost = $7800, Total Lease + Buy Cost = $8100.
Conclusion: Leasing to own a $2000 furniture set for 3 years costs $8100.
Example 7: Zero Buyout Option
Scenario: A lease agreement where the buyout price is $0 after all payments are made.
1. Known Values: Initial Value = $700, Regular Payment = $35 (weekly), Number of Payments = 78 (1.5 years), Buyout Price = $0.
2. Formula (Lease Only): Total Lease Cost = Regular Payment × Number of Payments
3. Calculation (Lease Only): Total Lease Cost = $35 × 78 = $2730
4. Formula (Lease + Buy): Total Lease + Buy Cost = Total Lease Cost + Buyout Price
5. Calculation (Lease + Buy): Total Lease + Buy Cost = $2730 + $0 = $2730
6. Results: Total Lease Cost = $2730, Total Lease + Buy Cost = $2730.
Conclusion: If the buyout is $0, the total cost to own is simply the sum of all lease payments.
Example 8: Short-Term Lease
Scenario: Leasing an item for a short period, like a few months.
1. Known Values: Initial Value = $300, Regular Payment = $40 (monthly), Number of Payments = 6 (6 months), Buyout Price = $50.
2. Formula (Lease Only): Total Lease Cost = Regular Payment × Number of Payments
3. Calculation (Lease Only): Total Lease Cost = $40 × 6 = $240
4. Formula (Lease + Buy): Total Lease + Buy Cost = Total Lease Cost + Buyout Price
5. Calculation (Lease + Buy): Total Lease + Buy Cost = $240 + $50 = $290
6. Results: Total Lease Cost = $240, Total Lease + Buy Cost = $290.
Conclusion: For this short lease, the total cost ($290) is slightly less than the initial item value ($300). *Note: This might indicate the initial value was inflated or the buyout is negative, which is unusual in typical agreements.* This example highlights how the structure varies.
Example 9: High Buyout Price
Scenario: A lease agreement with a relatively high buyout price.
1. Known Values: Initial Value = $1000, Regular Payment = $30 (weekly), Number of Payments = 52 (1 year), Buyout Price = $400.
2. Formula (Lease Only): Total Lease Cost = Regular Payment × Number of Payments
3. Calculation (Lease Only): Total Lease Cost = $30 × 52 = $1560
4. Formula (Lease + Buy): Total Lease + Buy Cost = Total Lease Cost + Buyout Price
5. Calculation (Lease + Buy): Total Lease + Buy Cost = $1560 + $400 = $1960
6. Results: Total Lease Cost = $1560, Total Lease + Buy Cost = $1960.
Conclusion: A high buyout price significantly increases the total cost to own the item.
Example 10: Low Payments, Long Term
Scenario: Very low weekly payments stretched over a very long period.
1. Known Values: Initial Value = $500, Regular Payment = $10 (weekly), Number of Payments = 260 (5 years), Buyout Price = $50.
2. Formula (Lease Only): Total Lease Cost = Regular Payment × Number of Payments
3. Calculation (Lease Only): Total Lease Cost = $10 × 260 = $2600
4. Formula (Lease + Buy): Total Lease + Buy Cost = Total Lease Cost + Buyout Price
5. Calculation (Lease + Buy): Total Lease + Buy Cost = $2600 + $50 = $2650
6. Results: Total Lease Cost = $2600, Total Lease + Buy Cost = $2650.
Conclusion: While payments are low, the total cost over a long term is much higher than the initial item value.
Frequently Asked Questions about Lease-to-Own
1. What is "Total Cost (Lease Only)"?
This is the total sum of all the regular payments you would make over the entire term of the lease agreement, assuming you make all of them but choose *not* to exercise the final purchase option. You would typically return the item at the end.
2. What is "Total Cost (Lease + Buy)"?
This is the overall amount you will have spent if you successfully complete all the regular lease payments *and* pay the final purchase option price to become the owner of the item.
3. How does this calculator work?
It performs two simple calculations: multiplying your regular payment by the number of payments for the lease-only cost, and then adding the final buyout price to the lease-only cost for the total cost including buying the item.
4. Does this calculator include interest or fees?
No. This calculator is a basic sum based on the numbers you input. Any interest or fees charged by the lease company are implicitly included within the "Regular Payment Amount" and potentially the "Final Purchase Option Price" they quote you. It doesn't break down those costs.
5. Why is the "Total Cost (Lease + Buy)" often much higher than the "Initial Item Value"?
Lease-to-own agreements often have a high effective cost compared to purchasing outright, especially when considering the time value of money and embedded financing charges. The difference highlights the premium paid for the flexibility or access provided by the lease structure.
6. What units should I use for input?
Use consistent currency units (e.g., USD, EUR) for all monetary inputs (Initial Item Value, Regular Payment Amount, Final Purchase Option Price). The "Number of Regular Payments" is a count.
7. Can I use this for any type of lease-to-own?
Yes, you can use it for items like furniture, appliances, electronics, etc., provided you have the four required numbers: the item's initial value (or purchase price if bought outright), the regular payment amount, the total number of scheduled payments, and the final buyout price.
8. What happens if I miss payments?
This calculator doesn't model missed payments. Typically, if you miss payments in a lease-to-own agreement, the company can repossess the item, and you forfeit the money you've already paid.
9. Does "Number of Regular Payments" mean weeks, months, or years?
It depends on your lease agreement. If you pay weekly, enter the total *weeks* of payments. If monthly, enter the total *months*. Just ensure this number represents the total count of the "Regular Payment Amount" you will make.
10. What if the lease agreement doesn't have a final purchase option price?
Some lease-to-own agreements structure payments such that after the final payment, you automatically own the item with no additional cost. In this case, enter "0" for the "Final Purchase Option Price". The "Total Cost (Lease Only)" and "Total Cost (Lease + Buy)" will be the same.
