About the Lease vs Buy Car Calculator
This lease vs buy car calculator compares two ways of driving a car for the same number of years. Buying: you make a down payment, finance the rest, and sell the car at the end, getting its resale value back. Leasing: you pay a drive-off amount and monthly payments, return the car at the end of each lease and start a new one, so you never own anything.
It is for anyone at the dealership choosing between a lease quote and a loan quote, or thinking about whether to keep leasing or finally buy. The key question it answers is net cost: what each option really costs after you account for what the car is worth when you are done.
If you sell the bought car before the loan is repaid, the remaining loan balance is paid off from the sale, and the calculator counts it. Leasing assumes you take out back-to-back leases at the same payment and drive-off cost and stay within the mileage allowance; excess-mileage and wear charges are not included. Insurance and maintenance are assumed similar for both.
With the default inputs, the amount the cheaper option saves is $12,600.96. Change any value above to recalculate instantly.
How to use the lease vs buy car calculator
- 1Enter the car price, your down payment and the loan rate and term.
- 2Enter the lease payment, term and amount due at signing from the lease quote.
- 3Choose how many years you plan to drive.
- 4Estimate the car’s resale value at the end of that period.
- 5Compare net costs — the lower one is the cheaper way to drive.
Formula and method
For buying, the loan payment M comes from the standard amortization formula. Over the k months you own the car (up to the loan term) you pay D down plus M × k, and if the loan is not finished you also pay off the remaining balance B_k when you sell. Subtracting the resale value gives the net cost.
For leasing, the number of leases L is the time you drive divided by the lease term, rounded up. Every lease costs the drive-off amount plus its monthly payments; the last lease counts only the months that fall inside your time period. Leasing has no resale value, so its total cost is its net cost.
- D
- Down payment on the purchase
- M
- Monthly loan payment
- k
- Months of loan payments made while you own the car
- B_k
- Remaining loan balance when you sell
- P, T
- Lease monthly payment and lease term
- L
- Number of leases needed to cover the period
Worked examples
$35,000 car, driving for 6 years
Buying: $5,000 down plus 60 payments of $579.98 is $39,799, less $15,000 resale = $24,799. Leasing: two 36-month leases at $450 plus two $2,500 drive-offs = $37,400. Buying saves about $12,601.
Only 3 years, then sell with the loan unpaid
After 36 payments you still owe about $13,086, which is paid off from the sale. The buy option costs about $19,966 net, versus $18,700 for one lease, so leasing is about $1,266 cheaper when you only keep the car three years.
$42,000 SUV kept 10 years
Buying costs $6,000 + 72 × $613.76 − $12,000 resale ≈ $38,191. Covering 10 years with leases takes four leases (the last one partial) for $74,400, so owning long-term is far cheaper.
Frequently asked questions
Is it cheaper to lease or buy a car?+
Buying and keeping a car for many years is usually cheaper because you stop making payments once the loan is paid off and you keep the resale value. Leasing can cost less over a short period, or if you would otherwise replace the car every two or three years.
What are the hidden costs of leasing?+
Excess-mileage charges (often 15¢–30¢ per mile over the allowance), excess wear-and-tear fees, disposition fees at turn-in, acquisition fees and early-termination charges can add significantly to a lease. Read the lease disclosure before signing.
When does leasing make sense?+
Leasing suits drivers who want a new car every few years, drive within the mileage limit, prefer a lower monthly payment and predictable repair costs under warranty, or can deduct lease payments as a business expense.
What about buying with cash?+
Paying cash avoids loan interest, so it typically has the lowest net cost. To approximate it here, set the down payment equal to the car price; the loan payment becomes zero.
Can I buy my car at the end of a lease?+
Most leases let you buy the car for the residual value stated in the contract, plus any purchase-option fee. That can be a good deal if the car is worth more than the residual on the used market.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.
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