Lease vs Buy Car Calculator
Leasing has lower payments but leaves you with nothing; buying costs more but you keep a car worth thousands. This calculator compares the net cost of each over the same period — payments minus the resale value you keep when you buy — and shows which is cheaper and by how much.
Use this lease vs buy calculator to settle the question for your exact numbers. Enter the car's price and the comparison period, then the loan terms and expected resale value if you buy, and the lease terms and residual if you lease. It works out the true net cost of each and names the winner.
Enter the car, the buy option and the lease option, then press Calculate.
How the lease vs buy calculator works
A fair comparison has to put both options on the same footing, so this tool measures the net cost of each over the same number of months. For buying, it finances the car plus tax over the period, adds up the down payment and every loan payment, then subtracts the car's estimated resale value at the end — because that value is a real asset you keep. Net cost of buying is therefore what you paid minus what you still own.
For leasing, it builds the payment the industry way — depreciation plus a finance charge from the money factor, taxed monthly — then adds the drive-off amount and every payment. There is nothing to subtract at the end, because you hand the car back. Comparing the two net figures shows the real gap. To dig into either side, use the auto lease calculator and the auto loan calculator, and check the resale assumption with the depreciation calculator.
The comparison
- Buy — you keep the resale value
- Lease — you keep nothing
- Same term — compared month-for-month
Why the answer is often "it depends"
Over a single lease term the two options are frequently close, because a lease is really just a way of paying for the depreciation you would suffer anyway. The picture changes with time. A buyer who keeps the car after the loan ends enjoys years with no payment and a car still worth something, so the cost per year keeps dropping. A serial leaser signs a new contract every few years and never escapes the payment. If you love a new car often and value low, predictable payments, leasing fits; if you keep cars for years, buying almost always wins.
Sanity-check the resale and residual
The comparison hinges on two forecasts: the resale value if you buy, and the residual if you lease. Both are guesses about the future, and both move the result. A model that holds its value well makes buying look better, because your resale equity is larger; a generous manufacturer residual makes leasing cheaper, because you pay for less depreciation. Use realistic figures — the car depreciation calculator helps — and try a pessimistic resale to see how robust the answer is.
Mileage limits, wear charges, and lease-end costs
The sticker payment is only part of a lease. Every lease sets an annual mileage cap — commonly around 10,000 to 15,000 miles a year — and charges a per-mile fee, often in the range of 15 to 30 cents, for every mile over it, which can add up to a painful bill if you drive a lot. At the end you also face an excess wear-and-tear charge for dents, worn tires or interior damage beyond normal use, plus a disposition fee to process the return. Buying has none of these end-of-term charges, so if you drive long distances or are hard on a car, that tilts the math toward buying — something a payment-only comparison can hide.
Estimate only — not financial advice. Excludes insurance, maintenance, mileage fees and lease-end charges. Resale and residual values are estimates. Confirm all figures before deciding.
How to use it & key terms
Enter the car price, tax and comparison term, then the buy and lease terms, and press Calculate to see which option costs less.
| Term | What it means |
|---|---|
| Net cost | Total paid minus any value you keep at the end. |
| Resale value | What a bought car is worth at the end — your equity. |
| Residual value | A leased car's lender-set value at lease end. |
| Drive-off | Cash due at lease signing. |
| Equity | Ownership value a buyer keeps; a leaser has none. |
| Comparison term | The period both options are measured over. |
Sources & methodology
For the buy option, the loan is the vehicle price plus sales tax minus the down payment, amortized over the comparison term at the loan APR; the net cost is the down payment plus all payments minus the estimated resale value (price times the resale percentage). For the lease option, the payment uses the standard method — depreciation (net cap cost minus residual, over the term) plus a finance charge (net cap cost plus residual, times the money factor of APR ÷ 2,400), with sales tax applied to the monthly payment — and the net cost is the drive-off plus all lease payments. The option with the lower net cost is cheaper. Insurance, maintenance and lease-end fees are excluded.
Sources: Standard amortization for the loan and the industry lease-payment method; net-cost comparison accounting for resale equity.
How incentives and rates tip the decision
The lease-versus-buy answer is not fixed for a given car — it shifts with the offers on the table at the time. Manufacturers regularly subsidise leases to move specific models, and when they do, leasing can look unusually cheap for reasons that have little to do with the car itself. Knowing where those offers come from helps you read a deal instead of simply reacting to a low monthly figure. The same is true in reverse: when the purchase-side offers are strong, buying can pull ahead of a lease that looked fine a month earlier.
A subsidised lease — sometimes called a subvented lease — works by adjusting the two numbers the lease payment is built from. The maker props up the residual value, so less depreciation is charged to you, and lowers the money factor below ordinary financing rates. Both push the monthly payment down. The catch is that these deals are usually tied to particular models, trims and terms, so the same brand can offer a compelling lease on one car and an unremarkable one on the next. When a lease special is running, the numbers can favour leasing even for someone who would normally buy.
The purchase side has its own incentives that tip the balance back. Cash rebates lower the price you finance, and low-APR or interest-free financing offers cut the cost of buying directly. A generous rebate or a subsidised loan rate can cancel out a lease's monthly advantage — especially when the car also holds its value well and leaves you with real resale equity at the end. The finance arms that manufacturers own can shift these offers from month to month, and they rarely spread evenly across a lineup — one trim may carry a rebate while another does not. Because these offers come and go, a model that favoured leasing one season may favour buying the next.
The practical lesson is to compare the actual deals, not the general reputation of leasing or buying. Take the real quoted price, rebate, money factor and loan rate you are offered, put them into this calculator, and let the net-cost comparison decide. A rule of thumb formed in one market can be exactly wrong in another — only the specific numbers in front of you can say which option is cheaper today. It takes only a minute, and it replaces guesswork with a figure you can act on.
Frequently asked questions
Is it better to lease or buy a car?
It depends on how long you keep cars and what you value. Leasing gives lower payments and a new car every few years but builds no equity, while buying costs more month to month yet leaves you owning an asset you can keep or sell. Over a single lease term the costs are often close; over many years, buying and holding a car is usually cheaper. This calculator compares the net cost of both over the same period so you can see the gap for your numbers.
How does this lease vs buy comparison work?
It measures the net cost of each option over the same number of months. For buying, it adds your down payment and all loan payments, then subtracts the car's estimated resale value at the end, because that value is yours to keep — so buying's net cost is what you spent minus what the car is still worth. For leasing, the net cost is the drive-off amount plus all lease payments, since you own nothing at the end. The option with the lower net cost wins.
What is the main financial difference between leasing and buying?
When you buy, you pay for the whole car but keep its remaining value; when you lease, you pay only for the depreciation during your term but walk away with nothing. That is why lease payments are lower — you are financing a smaller amount. The trade-off is equity: a buyer ends the period with a car worth thousands of dollars, while a leaser ends it needing another vehicle.
Does buying build equity?
Yes. Every loan payment you make chips away at the balance, and once the loan is paid off you own the car outright. Its resale value is real money you can put toward the next car or keep by driving it for years with no payment at all. Leasing builds no equity — at the end you return the car and start over — which is the single biggest reason buying tends to win over the long run.
What if I keep the car longer than the loan?
That is where buying pulls decisively ahead. Once a purchased car's loan is paid off, the payments stop but you keep driving, so the cost per year keeps falling the longer you own it. A leaser who wants to keep driving must start a new lease with new payments. This calculator compares a single term for a fair like-for-like view; if you plan to keep a car well beyond the loan, buying's advantage grows further.
What costs does this comparison leave out?
It focuses on the financing side — payments, resale value and taxes — and does not model insurance, maintenance, mileage overage fees on a lease, or the opportunity cost of a large down payment. Leases also carry wear-and-tear and disposition charges at the end. Use the result as a solid comparison of the core cost of each option, then adjust for your own insurance, upkeep and driving habits before deciding.
Can you lease a car with bad credit?
It is possible but harder than financing a purchase. Leasing is essentially a credit product, and approvals usually favor strong credit, so buyers with low scores face higher money factors, bigger money down, a required co-signer, or outright denial. Because a lease locks you into the lender's terms, weak-credit shoppers often find that buying with a subprime auto loan, then refinancing later once credit improves, is more flexible. If you do lease with thin credit, convert the money factor to an interest rate so you can see the true cost.
What happens at the end of a car lease?
You normally have three choices. You can return the car and walk away after paying any excess mileage or wear charges plus a disposition fee, buy the car for its preset residual value, or start a new lease or purchase. If you want out before the term ends, you can buy out the lease, transfer it to someone else where allowed, or sell it to a dealer if its market value covers the payoff. Knowing these exits up front helps you avoid surprise end-of-lease bills.