Buy Total (est.)
$5,772.68
Lease Total (36m)
$18,000.00
Cheaper Option
Buy
How it works
The Car Lease vs. Buy Calculator compares the total cost of leasing a vehicle against purchasing it (with or without financing) over a specified ownership period — accounting for depreciation, residual value, interest, fees, and opportunity cost of the down payment.
The lease-vs-buy decision is not as simple as comparing monthly payments. Leasing always has lower monthly payments, but buying builds equity. However, buying a depreciating asset financed at high interest with large down payment has its own costs. This calculator models the full financial picture of both options.
How to use it: enter the vehicle price, down payment, loan APR and term (for purchase), or monthly lease payment, lease term, money factor, and residual value (for lease). The calculator shows total cost of each option over the comparison period, and the break-even horizon where buying becomes cheaper.
True cost comparison includes: - Purchase: down payment, monthly payments, total interest, depreciation loss, maintenance, insurance differential - Lease: monthly payments, up-front fees (cap cost reduction, acquisition fee), disposition fee, mileage overage estimate
Depreciation reality: a new car loses 20–25% of its value in the first year and 15–18% per year after that. After 5 years, a $35,000 car is worth approximately $12,000–15,000 — a $20,000+ loss. Leasing shifts this depreciation risk to the manufacturer at the cost of having no equity at term end.
When leasing wins: short ownership horizon (2–3 years), low mileage, business use deduction, preference for always driving a new vehicle.
Privacy: vehicle financial data runs locally.
Frequently Asked Questions
- The money factor is the lease equivalent of an interest rate, expressed as a small decimal (e.g., 0.00125). To convert to APR, multiply by 2,400: 0.00125 × 2,400 = 3% APR. A money factor of 0.003 = 7.2% APR. Dealers sometimes present the money factor rather than APR — always convert to understand the true financing cost.
- The residual value is the projected value of the car at lease end (expressed as a percentage of MSRP). A higher residual means lower monthly payments (you're financing less depreciation). Leasing makes most financial sense on cars with high residuals (typically 50–60% of MSRP at 3 years) because you pay for less depreciation.
- Most leases allow 10,000–15,000 miles/year. Excess mileage charges run $0.15–$0.30 per mile. Going 5,000 miles over a 3-year lease at $0.25/mile costs $1,250 at lease return. If you drive significantly more than the standard allowance, negotiate a higher mileage limit upfront (costs more monthly but less per mile than overage fees).
- Yes in specific cases: business owners who can deduct lease payments as business expenses, people who want a new car every 3 years without the hassle of selling, drivers in high-maintenance cost periods (years 4–7 of ownership), and situations where the total cost of a 3-year lease is close to the depreciation cost of ownership for the same period.