Lease vs Buy Car Calculator
Compare the true total cost of leasing versus financing a car purchase over the same time horizon, including fees, loan interest, and resale value.
*Estimates only, not financial advice. Excludes insurance, maintenance, taxes, and mileage penalties, which can shift the comparison.
🚗 Lease or Buy: The Real Math
How the comparison is calculated and what it doesn't capture.
How it Works
Totals your lease payments plus fees over the lease term, then compares it to your down payment plus loan payments made over the same horizon, minus the car's estimated resale value at that point.
The Formula
Lease Cost = (Monthly Payment x Months) + Fees. Buy Cost = Down Payment + Loan Payments − Resale Value. The loan payment uses standard amortization: P x [r(1+r)^n] / [(1+r)^n − 1].
Pro Tip
If you drive high annual mileage or like to modify or heavily use your vehicle, buying almost always wins — lease mileage caps and wear-and-tear charges add up fast.
Frequently Asked Questions
Is it cheaper to lease or buy a car? +
It depends on how long you keep the car. Leasing usually has lower monthly payments but you own nothing at the end. Buying typically costs more upfront but you build equity, and once the loan is paid off you have a valuable asset instead of a returned vehicle. Over 5+ years, buying is usually cheaper; for short 2-3 year cycles, leasing can be competitive.
What is a residual value in a lease? +
Residual value is the car's predicted worth at the end of the lease term, set by the leasing company upfront. Your lease payments essentially cover the difference between the car's purchase price and this residual value, plus interest (called the money factor) and fees.
Do I own the car if I lease it? +
No. Leasing is essentially a long-term rental — you return the car at the end of the term unless you choose to buy it out at its residual value. Buying with a loan means you own the car outright once the loan is paid off.
Are there mileage limits when leasing a car? +
Yes, most leases cap annual mileage (commonly 10,000-15,000 miles per year) and charge a per-mile fee, often $0.15-$0.30, for every mile over that limit. This calculator does not account for excess mileage fees, so add them manually if relevant.
What costs are included when buying a car with a loan? +
Total cost of buying includes your down payment plus all loan payments made over the comparison period, minus the car's resale or trade-in value at the end of that period. Interest is embedded in the monthly loan payment through the annual percentage rate (APR).
Why do dealers push leasing so heavily? +
Leases often have lower advertised monthly payments, which makes cars feel more affordable and can boost showroom traffic. Dealers and manufacturers can also profit from the eventual resale of off-lease vehicles as certified pre-owned cars, creating an incentive to promote leasing.