Lease vs Buy Calculator

About the Lease vs Buy Calculator

The lease-versus-buy decision depends on your driving habits, financial situation, and how long you plan to keep the vehicle. Leasing offers lower monthly payments and the ability to drive a new car every few years, but you build no equity and face mileage restrictions.

Buying costs more per month but results in a paid-off asset. Over a long time horizon (6+ years), buying is almost always cheaper. Over shorter periods, leasing can be competitive, especially if you value always having the latest features and warranty coverage.

This calculator compares both options over the same time period, factoring in the vehicle's residual value to give you a fair comparison of total cost.

When This Page Helps

Without a direct comparison, it's impossible to know which option truly costs less. Monthly payment comparisons are misleading because buying creates equity. It gives a true total-cost comparison.

How to Use the Inputs

1. Enter the vehicle's MSRP and your negotiated sale price.
2. Enter the lease terms: residual %, money factor, term, and down payment.
3. Enter the buy terms: interest rate, loan term, and down payment.
4. Set the comparison period (e.g., 36 or 60 months).
5. Review the total cost of each option over the same time period.

Example Calculation

Tips & Best Practices

• Compare total cost over the same period, not just monthly payments.
• Factor in the value of the purchased car at the end of the comparison period.
• Leasing is better if you trade every 2–3 years regardless.
• Buying wins financially if you keep the car 5+ years after paying it off.
• Consider that lease payments never end — you always have a payment.
• Maintenance costs are lower during a lease (warranty coverage).

The True Cost Calculation

The fair way to compare lease vs. buy is total cost over the same period. For a purchase, subtract the car's estimated value at the end from total payments to get the net cost. For a lease, the total cost is simply all payments and fees, since you return the car.

When Leasing Wins

Leasing wins if you drive under 12,000 miles/year, want a new car every 3 years, value low maintenance costs, and are in a high tax bracket (some states allow lease payment deductions for business use).

When Buying Wins

Buying wins if you keep cars long-term, drive high miles, want to customize, or want payment-free years after the loan is paid off. A bought car driven for 10 years is significantly cheaper than three consecutive leases.

Frequently Asked Questions

• Is it cheaper to lease or buy a car?

  Over the long term (6+ years), buying is almost always cheaper because you eventually own the car outright. Leasing has lower short-term costs but you never build equity and always have a payment.

• What are the advantages of leasing?

  Lower monthly payments, always driving a newer car with warranty coverage, no resale hassle, and lower repair costs. You also avoid depreciation risk — you return the car at lease end.

• What are the disadvantages of leasing?

  Mileage restrictions (typically 10,000–15,000/year), no equity at the end, potential wear-and-tear charges, and higher long-term cost if you always lease. Early termination fees can be steep.

• When does buying make more sense?

  Buying makes more sense if you: drive more than 15,000 miles/year, plan to keep the car 5+ years, want to customize the vehicle, or want to eliminate car payments eventually. Review your results periodically to ensure they still reflect current conditions.

• Can I negotiate a lease like a purchase?

  Yes. Negotiate the sale price (cap cost), money factor, and dealer fees. The residual is set by the manufacturer. A lower cap cost directly reduces your monthly payment, just like with a purchase.

• What happens at the end of a lease?

  You can return the car (pay any fees for excess miles/wear), buy the car at the residual price, or sometimes trade into a new lease. If the car is worth more than the residual, buying it can be a good deal.