Lease vs Buy Calculator
Compare the true cost of leasing against buying the same car.
Reviewed by the Calculation Machine team · Updated 24 October 2026 · How we check our maths
Your values
ⓘ Live results
- Cheaper option
- Leasing
- Cost to lease
- $19,200.00
- Net cost to buy
- $19,653.15
- Difference
- $453.15
Quick answer
To compare leasing with buying, add up everything you pay on the lease (due at signing plus monthly payments), then compare it with the net cost of buying: down payment plus loan payments plus any balance still owed, minus what the car is worth at the end. With a $35,000 car over 36 months, a $450 lease with $3,000 down costs $19,200, while buying at 7% nets out about $453 more.
What the Lease vs Buy calculator does
This calculator puts a lease and a car loan side by side over the same period and tells you which leaves you with less money spent once the car's resale value is counted. Buying is modeled as a 60-month loan on the price minus your down payment; at the end of your comparison period you pay off whatever balance remains and get the car's resale value back.
Use it when a dealer offers both options on the same vehicle, or when you are deciding whether to keep a car for three years or five. The resale value matters most: a car that holds its value favors buying, while one that depreciates quickly favors leasing. The car depreciation calculator can help you estimate it.
The comparison leaves out costs that are similar either way (insurance, fuel) and costs that depend on your behavior, such as excess-mileage and wear charges on a lease or repairs after the warranty on an owned car. To size the loan itself, use the car loan calculator.
The formula
Lease cost = monthly lease × months + due at signing Net buy cost = down payment + loan payments made + loan balance remaining − resale value Loan payment = L × r ÷ (1 − (1 + r)^−60)
| Symbol | Meaning | Unit |
|---|---|---|
| months | Comparison period: how long you would keep the car | months |
| L | Amount financed: vehicle price minus down payment | $ |
| r | Monthly loan rate: annual rate ÷ 12 ÷ 100 | decimal |
| 60 | Loan term assumed by the calculator | months |
| resale value | What the car would sell or trade in for at the end of the period | $ |
The loan payment uses the standard amortization formula for a fixed-rate installment loan. The calculator assumes a 60-month loan, so keep the comparison period at 60 months or less for meaningful results. It does not discount future cash flows, include sales tax, or count interest you could earn on the money you keep by leasing, so treat small differences (a few hundred dollars) as a tie.
Worked examples
Three years on a mid-size car
A $35,000 car: lease at $450 a month with $3,000 due at signing, or buy with $5,000 down at 7% and sell after 36 months for $20,000.
Inputs
- Vehicle price35000 $
- Comparison period36 months
- Monthly lease payment450 $
- Lease due at signing3000 $
- Loan rate if buying7 %
- Down payment if buying5000 $
- Resale value at end20000 $
Result
- Cheaper optionLeasing
- Cost to lease$19,200.00
- Net cost to buy$19,653.15
- Difference$453.15
Leasing comes out slightly cheaper, by under $500 — effectively a tie. A lower loan rate or a higher resale value would tip it toward buying; excess-mileage charges would tip it the other way.
Keeping the car for five years
The same car, but kept for 60 months, with a lower $16,000 resale value after five years. The lease figure assumes you could keep leasing at $450 a month.
Inputs
- Vehicle price35000 $
- Comparison period60 months
- Monthly lease payment450 $
- Lease due at signing3000 $
- Loan rate if buying7 %
- Down payment if buying5000 $
- Resale value at end16000 $
Result
- Cheaper optionBuying
- Cost to lease$30,000.00
- Net cost to buy$24,642.16
- Difference$5,357.84
Buying wins by over $5,000. Once the loan is paid off, the car is yours, whereas lease payments never stop. The longer you keep a car, the stronger the case for buying.
Higher-priced car that holds its value
A $48,000 SUV: lease at $620 a month with $4,000 due at signing, or buy with $8,000 down at 5.9% and sell after 36 months for $30,000.
Inputs
- Vehicle price48000 $
- Comparison period36 months
- Monthly lease payment620 $
- Lease due at signing4000 $
- Loan rate if buying5.9 %
- Down payment if buying8000 $
- Resale value at end30000 $
Result
- Cheaper optionBuying
- Cost to lease$26,320.00
- Net cost to buy$23,196.24
- Difference$3,123.76
Buying wins by about $3,100, mainly because the vehicle is expected to keep over 60% of its price. Check real used prices for three-year-old examples before relying on a resale estimate.
When leasing tends to win and when buying does
- Leasing tends to win when you replace your car every two to three years, the manufacturer is subsidizing the lease (low money factor or high residual), you drive within the mileage allowance, or the car is likely to depreciate faster than the lease assumes.
- Buying tends to win when you keep cars five years or longer, drive more than about 15,000 miles a year, can get a low loan rate, or the model holds its value well.
- Business use can change the answer because of how lease payments and vehicle depreciation are deducted. That depends on your tax situation, so ask an accountant before deciding on tax grounds.
Lease costs this comparison leaves out
A lease quote rarely includes everything you might pay. Add any of these you expect to the due-at-signing figure to get a fairer comparison.
| Cost | When it applies | What it depends on |
|---|---|---|
| Excess-mileage charge | At lease end, if you exceed the allowance | Set in the contract, often about 15–25 cents per mile |
| Excess wear and tear | At lease end inspection | Dents, tire wear, interior damage beyond the lessor's guidelines |
| Acquisition fee | At signing | Charged by the leasing company; sometimes negotiable |
| Disposition fee | When you return the car | Often waived if you lease or buy another car from the same brand |
| Early termination | If you end the lease early | Can be large; read the early-termination clause |
| Gap insurance | Throughout the lease | Often included in leases, but check |
Reading a lease quote: money factor and residual
A lease payment is mostly depreciation (the price you negotiate minus the residual value, spread over the term) plus a finance charge set by the money factor. Multiply the money factor by 2,400 to get an approximate equivalent APR: a money factor of 0.00250 is about 6%.
You can negotiate the vehicle price (capitalized cost) on a lease just as you would when buying. To work out a lease payment from these numbers, use the auto lease calculator, then bring the monthly figure back here.
How to use the Lease vs Buy Calculator
- 1Enter the vehicle price you have negotiated and the number of months you plan to keep the car (60 or fewer).
- 2Enter the monthly lease payment and the total due at signing from the lease quote.
- 3Enter the loan APR and down payment you would use if buying.
- 4Estimate the resale value at the end of the period from used listings for a car of that age and mileage.
- 5Compare the cost to lease with the net cost to buy; treat a gap of a few hundred dollars as too close to call.
Frequently asked questions
Is it better to lease or buy a car?
Buying is usually cheaper if you keep the car beyond the loan term, because you stop making payments but still own an asset. Leasing can be cheaper over two to three years, especially with manufacturer lease deals.
Why does resale value make such a difference?
When you buy, the car's value at the end is money you get back, so it reduces your net cost dollar for dollar. A lease returns nothing at the end, so the comparison swings on how much the car is worth when you would sell it.
What happens if I drive more than the lease mileage limit?
You pay a per-mile charge set in the contract when you return the car. If you know you will exceed the allowance, it is usually cheaper to buy extra miles up front.
Can I buy my car at the end of the lease?
Most leases include a purchase option at the residual value stated in the contract. If the car is worth more than that residual on the used market, buying it out can be good value.
Does a bigger down payment on a lease save money?
It lowers the monthly payment but not the total by much, and if the car is written off early you may not get it back. Many advisers suggest keeping the amount due at signing low for that reason.
References
- Keys to Vehicle Leasing: A Consumer Guide — Board of Governors of the Federal Reserve System
- Regulation M (Consumer Leasing) — Consumer Financial Protection Bureau
About this calculator
- Built and reviewed by the Calculation Machine team · How we build and test calculators
- Last reviewed: October 24, 2026
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