Which is usually cheapest for a contractor?

Buying and keeping it a long time, in raw cost. Vehicles cost the most in their first years, so the longer you hold one the cheaper each year becomes. The reason contractors lease anyway is cash flow and predictability, and those are legitimate reasons — just be clear you are paying for them.

What resale value should I assume?

Look up what your exact model sells for at the age you plan to sell it, rather than using a percentage rule. Work trucks in the trades often hold value better than people expect, and getting this wrong changes the answer more than the interest rate does.

Does this account for Section 179 or bonus depreciation?

No, deliberately. Those rules change, they depend on your overall tax position and the year, and a calculator that pretended otherwise would be wrong for someone. Run this for the cash comparison and take the tax question to your CPA — for a large purchase it can be decisive.

Free tool

Buy, lease or finance a work vehicle?

The monthly payment is the number salespeople compete on and the least useful one. What matters is total cost over the period you keep it, and what you own at the end.

Method reviewed by Darren Lim, US CPALicence CPA.74253602

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Cheapest over 6 years

Finance

$48,509 all in, against $50,501 for lease — a difference of $1,992. And you own something at the end.

Vehicle price, paid today$58,000

Out-of-warranty repairs$4,200 spread over the back half, in today's money$2,682

Less resale$19,000 in 6 years is worth this today-$10,453

Buy outright, total$50,228

Monthly payment$50,000 over 5 years at 8.5%$1,025.83

Payments, in today's money$61,550 paid, $11,550 of it interest$48,281

Down payment$8,000

Finance, total$48,509

Lease payments, in today's money$880 × 72 months = $63,360 paid$47,501

Down at signing$3,000

Lease, totalNothing owned at the end$50,501

1. Finance$48,509

2. Buy outright$50,228

3. Lease$50,501

Every figure is a present value — future money discounted back to today at the rate you entered, which is the only way to compare three options that pay at different times. Cash comparison only: purchase, finance and lease are treated differently for tax, the rules change, and on a large purchase that can flip the answer. Take it to your CPA before you sign.

Compare over the years you keep it, not per month

A lower monthly payment across a longer term is usually more expensive in total, and a lease payment is lower than a finance payment because you are not buying anything. Comparing monthlies across those three options tells you almost nothing.

The honest comparison is every dollar that leaves over the period you will actually keep the vehicle, minus whatever you have left at the end. Buying outright costs the most on day one and the least over eight years. A lease costs the least per month and leaves you with nothing.

Cash has a cost even when you have it

Paying cash looks free because there is no interest. It is not free — that money could have funded materials on a job, a hire, or simply stayed in the account through a slow month. That is a real opportunity cost and it belongs in the comparison, which is why this calculator asks what your money is worth to you.

For a contractor with a tight working capital position, financing a truck at a modest rate and keeping the cash is frequently the better decision even though it costs more in interest. For one sitting on idle cash, it usually is not.

What the comparison cannot tell you

Tax treatment. Purchase, finance and lease are treated differently, deductions and depreciation rules change, and the right answer depends on your entity, your other assets and the year. That belongs with your CPA and it can genuinely flip the result.

Mileage limits. A lease with an allowance you will exceed carries excess charges that can undo the entire saving. If you run a service truck hard, check the cap against your real annual mileage before anything else.

And maintenance. A lease usually keeps you inside warranty; a truck you keep for eight years will not be, and the last three years of repairs are a real cost this calculator lets you enter separately.

Common questions

Which is usually cheapest for a contractor?: Buying and keeping it a long time, in raw cost. Vehicles cost the most in their first years, so the longer you hold one the cheaper each year becomes. The reason contractors lease anyway is cash flow and predictability, and those are legitimate reasons — just be clear you are paying for them.
What resale value should I assume?: Look up what your exact model sells for at the age you plan to sell it, rather than using a percentage rule. Work trucks in the trades often hold value better than people expect, and getting this wrong changes the answer more than the interest rate does.
Does this account for Section 179 or bonus depreciation?: No, deliberately. Those rules change, they depend on your overall tax position and the year, and a calculator that pretended otherwise would be wrong for someone. Run this for the cash comparison and take the tax question to your CPA — for a large purchase it can be decisive.

What we do about it

Vehicles and equipment recorded properly as assets and liabilities with payments split between interest and principal, so the balance sheet reflects what you actually own and the P&L is not distorted by a truck booked as an expense.