Lease vs Buy Car Calculator
Whether to lease or buy a car is one of those decisions that feels like it should have a simple answer, but the honest answer is that it depends heavily on how long you plan to keep the vehicle, how many miles you drive, and what you value more — lower monthly payments or long-term ownership. Leasing typically offers a lower monthly payment because you're only paying for the vehicle's depreciation during the lease term, not its full value, but you walk away with nothing at the end unless you buy it out. Buying means higher payments (or a larger upfront cost) but you build equity in an asset you can keep, sell, or drive payment-free once it's paid off. This calculator puts real numbers behind that comparison — factoring in monthly payments, upfront costs, and what you'd have at the end of each path — so the decision is based on your actual numbers rather than a general rule of thumb.
How the Lease vs Buy Car formula works
The comparison nets out total cash outflow against what you'd own or recover at the end of the period:
Total lease cost = Down payment + (Monthly lease payment × Months) Total buy cost = Down payment + (Monthly loan payment × Months) − Estimated resale value at end of period Difference = Total buy cost − Total lease cost
Step-by-step calculation
- Add up every dollar paid into the lease: the upfront/down payment plus monthly payments across the full lease term.
- Add up every dollar paid into the purchase: the down payment plus monthly loan payments across the same period.
- Subtract the vehicle's estimated resale or trade-in value at the end of that period from the total buy cost, since that value is money you'd recover that a lease never returns.
- Compare the two net totals — the lower one is the cheaper path over that specific time horizon.
Worked example
Over 36 months: Leasing costs $2,000 down plus $350/month = $2,000 + (350×36) = $14,600 total, with nothing owned at the end. Buying costs $3,000 down plus $480/month = $3,000 + (480×36) = $20,280, but the car is worth an estimated $16,000 at that point. Net buy cost = 20,280 − 16,000 = $4,280 — making buying substantially cheaper over this specific 3-year window once resale value is factored in.
Why the 'right' answer depends on your time horizon and driving habits
The single biggest factor that flips this comparison is how long you actually keep the car. Over a short window — say, 2 to 3 years, matching a typical lease term — leasing often looks more attractive because you avoid the steepest part of a new car's depreciation curve, which happens in the first few years of ownership. But stretch the time horizon to 6, 8, or 10 years, and buying almost always wins, because once a purchased car is paid off, your only ongoing costs are maintenance, insurance, and fuel — while a lease requires you to sign a new agreement (and start a new payment cycle) every few years indefinitely if you want to keep driving something similarly new.
Mileage is the other major variable this calculator's headline numbers don't automatically capture, but it's worth accounting for separately. Leases typically cap annual mileage — commonly 10,000 to 15,000 miles per year — with per-mile overage charges that can add up fast if you regularly exceed that limit. If you have a long commute or drive significantly more than the average driver, those overage fees can erase much of a lease's apparent savings, and buying (with no mileage restriction) becomes more attractive even over a shorter time horizon.
There's also a flexibility dimension that doesn't show up in a pure cost comparison. Buying means you're free to modify the car, sell it whenever you want, or drive it well past the point where a lease would have ended, with no return inspection or excess-wear charges to worry about. Leasing offers the opposite kind of flexibility — the ability to switch into a new vehicle every few years without the hassle of privately selling or trading in a used car, and often with lower repair risk since you're driving the vehicle mostly under its factory warranty period. Neither is objectively 'better' — the math in this calculator tells you which is cheaper for your specific numbers, but the right choice also depends on how much you value ownership versus flexibility.
Frequently asked questions
Why does buying often look more expensive month-to-month but cheaper overall?
A car loan payment is typically higher than a lease payment on the same vehicle because you're paying off the full purchase price (plus interest) rather than just the depreciation during a lease term. But once the loan is paid off, you keep an asset with real resale value — money a lease never returns — which is why total cost comparisons often favor buying over longer periods.
Does this calculator account for maintenance costs?
No — this comparison focuses on financing costs (payments, down payment, and resale value), since maintenance costs vary by vehicle and can apply to both leased and owned cars similarly during the loan or lease term, though leased cars are often still under factory warranty for most or all of the lease.
What happens at the end of a lease?
You typically have three options: return the car and walk away, lease a new vehicle, or buy the car outright at a predetermined 'residual value' set in your lease contract — which can sometimes be a good deal if the car turns out to be worth more than that residual value on the used market.
Is my estimated resale value reliable?
It's an estimate, and actual resale value depends on the vehicle's condition, mileage, market demand, and broader used-car pricing trends at the time of sale — treat the number as a reasonable planning estimate rather than a guarantee.
Does leasing make more sense for a business?
Some businesses lease vehicles for tax and cash-flow reasons that don't apply the same way to personal use — if this is for business use, it's worth discussing with an accountant, since tax treatment can meaningfully shift the comparison.