Car Lease vs Buy Calculator

Compare the true cost of leasing versus financing the same car over the lease term.

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Lease payments are almost always lower than loan payments on the same car — but the monthly payment is only part of the picture. When you finance a purchase, part of every payment builds equity: at the end of the loan you own an asset you can sell or keep driving payment-free. When you lease, you pay for the vehicle's depreciation plus financing charges and hand the keys back with nothing. This calculator puts the two options on equal footing by comparing total cost over the same window — the lease term. For leasing, it adds your upfront payment and every monthly lease payment. For buying, it adds your down payment and loan payments over the same months, then credits the equity you would hold at that point: the car's estimated market value minus the remaining loan balance. The result is a like-for-like net cost comparison and a verdict on which option is cheaper for your specific numbers. Leasing tends to win on cash flow and works for people who always want a new car under warranty; buying tends to win on long-run cost, especially if you keep the car well beyond the loan. Numbers vary with negotiated price, money factor, residual value, mileage allowances, and how long you actually keep a purchased car — treat the output as a decision-support estimate, not a quote.

How It Works

The two options are compared over the same window — the lease term — so the comparison is like-for-like. Lease cost is simple cash out: the amount due at signing plus the monthly payment times the number of months. Buy cost starts with the loan payment, computed with the standard amortization formula on the financed amount (price minus down payment). The simulation then tracks the loan balance month by month through the end of the lease term. Your equity at that point is the car's estimated market value minus the remaining loan balance. Net buying cost = down payment + loan payments made − equity. If the lease's total cash out exceeds the net buying cost, buying is cheaper, and vice versa. The comparison deliberately excludes costs that are similar under both options (insurance, fuel, registration) and simplifies others that vary by contract: lease disposition fees, excess mileage charges (typically $0.15–0.30 per mile over the allowance), sales tax treatment (which differs by state — some tax the full price when buying but only payments when leasing), and maintenance differences. Resale value is an estimate — actual used-car prices vary with market conditions, mileage, and condition, so test a pessimistic and optimistic value to see how sensitive your verdict is.

Examples

$40,000 SUV — typical lease vs 60-month loan
$450/month lease with $2,500 due at signing, versus buying with $4,000 down at 7% for 60 months, car worth $24,000 after 3 years.
Result: Lease costs $18,700 over 36 months; buying nets out around $21,600 after ~$8,100 of equity — the lease is about $2,900 cheaper over this window. Buying pulls ahead if you keep the car past the loan.
Aggressive lease deal on a $35,000 sedan
A subsidized $299/month lease with $2,000 down, versus a 6.5% loan with $3,500 down; car worth $21,000 after 3 years.
Result: The subsidized lease (~$12,800 total) beats buying's ~$18,500 net cost by roughly $5,800 over the term — manufacturer lease incentives can decisively win a 3-year window.

Frequently Asked Questions

Does buying always come out cheaper?
Not over a single lease term — the time horizon decides it. During the first three years, a financed purchase concentrates costs up front: loan payments are interest-heavy, the car takes its steepest depreciation, and with a 60- or 72-month loan your equity builds slowly, so leasing often wins the 36-month window on pure cash flow. Buying's advantage arrives later: once the loan is paid off you drive payment-free while the car still holds value, and every additional year of ownership widens the gap. The practical rule: if you'd replace the car every lease cycle anyway, compare the options exactly as this calculator does; if you keep cars 7+ years, buying is almost always cheaper overall.
When does leasing genuinely make sense?
Leasing fits people who want a new car every two to three years anyway, drive within mileage allowances (typically 10,000–15,000 miles/year), value a car permanently under warranty, or can write off lease payments as a business expense. Manufacturer-subsidized leases on slow-selling models can also be genuinely cheap — sometimes cheaper than buying, as the calculator can confirm. If any of those describe you, the convenience premium of leasing may be small or negative.
What costs does the comparison leave out?
Costs that are roughly equal under both options — insurance, fuel, registration — are excluded. Lease-specific charges like disposition fees ($300–500), excess mileage ($0.15–0.30/mile), and wear-and-tear charges are not modeled, and neither are buy-side maintenance costs after the warranty expires. Sales tax treatment also differs by state: many states tax only the lease payments rather than the full vehicle price, which modestly favors leasing. If you expect significant charges in any of these categories, mentally add them to the relevant side.
How do I estimate the car's value at the end of the term?
A reasonable rule of thumb: mainstream vehicles retain roughly 55–65% of their original price after three years, 45–55% after four, and 35–45% after five. Brands with strong resale (Toyota, Honda, Subaru, trucks generally) sit at the top of those ranges; luxury sedans and EVs with fast-moving technology often sit below them. For a sharper estimate, look up 3-year-old versions of the same model on used-car sites, or check the residual value printed in the lease contract itself — that's the leasing company's own forecast.
Should I put money down on a lease?
Generally as little as possible. A lease down payment (capitalized cost reduction) lowers the monthly payment but is money you never recover — and if the car is totaled or stolen early in the lease, that upfront money is typically gone, since the insurance payout goes to the leasing company. When comparing lease offers, focus on the total of all payments plus everything due at signing, not the monthly figure alone.

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