Lease vs Buy Car Calculator
Compare the true cost of leasing and financing the same car over the years you'll keep it, including mileage overage, the loan balance and resale value.
Lease vs Buy Car Calculator: with the default inputs, extra cost of leasing is $1,380.
The negotiated price, the same for both routes.
The comparison window. Buying wins by more the longer this is.
Cap-cost reduction, acquisition fee, first payment — everything you hand over on day one.
Typically $0.15–$0.30 a mile, billed at lease end.
What the car is worth when your window ends. Use the car depreciation calculator to estimate it.
Positive means leasing costs more over this window; negative means leasing is cheaper.
- In words
- Buying is cheaper by $1,380 over 3 years — about $38.33 a month.
- Total cost to lease
- $23,550
- Total cost to buy
- $22,170Cash out, less what the car is still worth at the end.
- Lease cost per month, all in
- $654.17
- Buy cost per month, all in
- $615.84
- Loan payment
- $704.38
- Mileage overage charge
- $750
- Loan balance at the end
- $15,812
- Equity in the car at the end
- $7,188Resale value minus what you still owe. A lease always ends at zero.
Assumptions
- Same negotiated vehicle price on both sides.
- Excludes insurance, fuel, maintenance, tyres, registration and sales tax from both routes.
- No opportunity cost is charged on cash tied up in the down payment.
- Leases longer than one term are assumed to renew on identical terms.
- Excludes disposition fees, wear-and-tear charges, gap insurance and early-termination penalties, all of which fall on the lease side.
- Resale value is taken as entered; it is the least certain number in the model.
| Item | Lease | Buy |
|---|---|---|
| Cash up front | $3,000 | $4,000 |
| Monthly payments over the window | $19,800 | $25,358 |
| Mileage overage | $750 | $0 |
| Loan balance still owed | $0 | $15,812 |
| Less: value of the car you keep | $0 | -$23,000 |
| Total cost | $23,550 | $22,170 |
A lease ends with nothing in your hands; buying ends with a car worth the resale figure, which is why it appears as a credit.
How this is worked out
The formula
Lease cost = cash at signing × leases needed + monthly payment × months + overage overage = max(0, miles driven − miles allowed) × charge per excess mile Buy cost = down payment + loan payments made + loan balance remaining − resale value loan payment = pmt(price − down, APR ÷ 12, term) balance after m payments = L(1+r)^m − payment × ((1+r)^m − 1) ÷ r Difference = lease cost − buy cost (positive: leasing costs more)
Open How it’s calculated above to see this worked through with your own numbers.
What you enter
- Vehicle price
- The negotiated price, the same for both routes.in dollars · 0 or more · defaults to 40000
- Years you'll keep it
- The comparison window. Buying wins by more the longer this is.from 1 to 15 · whole numbers only · defaults to 3
- Lease: cash due at signing
- Cap-cost reduction, acquisition fee, first payment — everything you hand over on day one.in dollars · 0 or more · defaults to 3000
- Lease: monthly payment
- A number.in dollars · 0 or more · defaults to 550
- Lease: term
- A number.from 1 to 60 · whole numbers only · defaults to 36
- Lease: annual mileage allowance
- A number.0 or more · whole numbers only · defaults to 12000
- Lease: charge per excess mile
- Typically $0.15–$0.30 a mile, billed at lease end.in dollars · from 0 to 2 · defaults to 0.25
- Miles you actually drive
- A number.0 or more · whole numbers only · defaults to 13000
- Buy: down payment
- A number.in dollars · 0 or more · defaults to 4000
- Buy: loan APR
- A number.a percentage · from 0 to 30 · defaults to 6.5
- Buy: loan term
- A number.from 1 to 96 · whole numbers only · defaults to 60
- Buy: resale value at the end
- What the car is worth when your window ends. Use the car depreciation calculator to estimate it.in dollars · 0 or more · defaults to 23000
What you get back
- Extra cost of leasingmain answer
- Positive means leasing costs more over this window; negative means leasing is cheaper.
- In words
- Total cost to lease
- Total cost to buy
- Cash out, less what the car is still worth at the end.
- Lease cost per month, all in
- Buy cost per month, all in
- Loan payment
- Mileage overage charge
- Loan balance at the end
- Equity in the car at the end
- Resale value minus what you still owe. A lease always ends at zero.
What this assumes
- Same negotiated vehicle price on both sides.
- Excludes insurance, fuel, maintenance, tyres, registration and sales tax from both routes.
- No opportunity cost is charged on cash tied up in the down payment.
- Leases longer than one term are assumed to renew on identical terms.
- Excludes disposition fees, wear-and-tear charges, gap insurance and early-termination penalties, all of which fall on the lease side.
- Resale value is taken as entered; it is the least certain number in the model.
About this calculator
Leasing and financing look comparable when you stare at the monthly payments, and they are not. A lease payment covers only the depreciation and finance charge for the years you drive it; a loan payment buys the whole car. The honest comparison is total cash out over the years you actually keep the vehicle, with the value of what you own at the end subtracted from the buying side. That is what this calculator does.
How the comparison is built
Leasing costs the cash due at signing, plus every monthly payment, plus any mileage overage at the end. If your window is longer than the lease term, the model assumes you sign another lease on the same terms — which flatters leasing, since real prices and residuals drift.
Buying costs the down payment, plus every loan payment made inside the window, plus whatever you still owe if the loan outlives the window — minus the resale value of the car, which is yours. That subtraction is the whole story: buying converts payments into an asset, leasing converts them into nothing.
Assumptions, stated plainly
- Both routes use the same negotiated vehicle price.
- Sales tax, registration, insurance, fuel, tyres and maintenance are excluded from both sides. They are broadly similar, with one real exception: a leased car is under warranty for the whole term, while a bought car past year three is exposed to repair bills.
- No opportunity cost is charged on the larger down payment. If you would otherwise have invested that cash, buying looks slightly worse than shown.
- The resale value is whatever you enter — it is the single most important and least certain input in the whole model.
- Gap insurance, disposition fees, wear-and-tear charges at lease end and early-termination penalties are not modelled. All of them fall on the lease side.
- Business use, in which lease payments may be deductible, is ignored.
What generally decides it
Buying wins over long horizons, because the loan ends and the car keeps working. Leasing is competitive over exactly one lease term and then loses ground every year afterwards. Leasing genuinely wins when you want a new car every three years regardless, when you need a fixed cost with no repair exposure, when the manufacturer is subsidising the residual to move metal, or when the car is a deductible business expense.
Two traps are worth naming. A large cash-at-signing amount on a lease is money you can lose outright if the car is totalled in month two, which is why "zero down" leases are often the better structure. And mileage is not a rounding error: 3,000 extra miles a year at $0.25 is $2,250 over a 36-month lease, enough to flip most close comparisons.
Frequently asked questions
▸Is it cheaper to lease or buy a car?
Over one lease term they are usually close; over five years or more, buying is almost always cheaper, because the loan ends while lease payments never do. The crossover typically falls just after the loan is repaid.
▸Why is the lease payment so much lower than the loan payment?
A lease only finances the depreciation over the term plus interest, not the whole car. You are paying for the slice of the vehicle you use — and you hand it back at the end with nothing to show.
▸What does going over the mileage limit cost?
Usually $0.15 to $0.30 a mile, charged at lease end. Three thousand extra miles a year on a 36-month lease at $0.25 is $2,250 — often enough to reverse the comparison.
▸Should I put money down on a lease?
Generally no. Cash at signing does not reduce the total cost much, and it is unprotected: if the car is stolen or totalled early, insurance pays the leasing company and your down payment is gone.
▸Does this include insurance, fuel and maintenance?
No — they are similar on both sides and would swamp the comparison. The one asymmetry to keep in mind is warranty coverage: a leased car is always under warranty, an owned one eventually is not.
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