Should You Lease or Buy Your Next Car?
Choosing between leasing and buying a vehicle is one of the most significant financial decisions a driver makes. This Car Lease vs. Buy Calculator is designed to help you analyze the long-term financial impact of both choices beyond just the monthly payment.
The Financial Mechanics of Buying
When you buy a car with a loan, you are paying for the entire value of the vehicle plus interest. Once the loan is paid off, you own an asset. The "Net Cost" of buying is calculated as the total of all monthly payments plus your down payment, minus the estimated resale value of the car at the end of the term.
- Pros: No mileage limits, you can customize the car, and you build equity.
- Cons: Higher monthly payments and the risk of depreciation.
The Financial Mechanics of Leasing
Leasing is essentially "renting" the car for its most expensive years of depreciation. You pay for the difference between the car's current price and its predicted residual value at the end of the lease, plus a "money factor" (interest).
- Pros: Lower monthly payments, usually covered by warranty for the whole term, and a new car every few years.
- Cons: Strict mileage limits (usually 10,000–15,000 per year), no ownership equity, and potential "wear and tear" fees.
Real-World Example Comparison
Imagine a $35,000 sedan. If you finance it over 60 months with $5,000 down at 5.5% interest, your monthly payment would be roughly $573. After 5 years, you've paid about $39,380. If the car is then worth $15,000, your total net cost was $24,380.
Alternatively, if you lease that same car for 36 months at $450/month with $3,000 down, you spend $19,200 over 3 years. To compare this fairly to a 5-year loan, you must consider what happens in those remaining 2 years—likely starting a second lease, which often makes leasing more expensive in the long run but cheaper for short-term cash flow.
How to Use This Calculator
- Enter the Vehicle Price and your intended Down Payment for the purchase option.
- Input the Interest Rate you qualify for and the Loan Term.
- Estimate the Resale Value. (Standard cars usually retain 40-50% of value after 5 years).
- Enter the Lease Terms provided by your dealership.
- Click "Compare Costs" to see the total out-of-pocket net cost for both scenarios.
function calculateLeaseVsBuy() {
// Get Buy Inputs
var buyPrice = parseFloat(document.getElementById('buyPrice').value) || 0;
var buyDown = parseFloat(document.getElementById('buyDown').value) || 0;
var buyRate = parseFloat(document.getElementById('buyRate').value) / 100 / 12 || 0;
var buyTerm = parseInt(document.getElementById('buyTerm').value) || 0;
var buyResale = parseFloat(document.getElementById('buyResale').value) || 0;
// Get Lease Inputs
var leaseMonthly = parseFloat(document.getElementById('leaseMonthly').value) || 0;
var leaseDown = parseFloat(document.getElementById('leaseDown').value) || 0;
var leaseTerm = parseInt(document.getElementById('leaseTerm').value) || 0;
var leaseFees = parseFloat(document.getElementById('leaseFees').value) || 0;
// Calculate Loan Payment
var loanAmount = buyPrice – buyDown;
var monthlyLoanPayment = 0;
if (buyRate > 0) {
monthlyLoanPayment = loanAmount * (buyRate * Math.pow(1 + buyRate, buyTerm)) / (Math.pow(1 + buyRate, buyTerm) – 1);
} else {
monthlyLoanPayment = loanAmount / buyTerm;
}
var totalPaidBuy = (monthlyLoanPayment * buyTerm) + buyDown;
var netBuyCost = totalPaidBuy – buyResale;
// Calculate Lease Total
var totalLeaseCost = (leaseMonthly * leaseTerm) + leaseDown + leaseFees;
var effectiveMonthlyLease = totalLeaseCost / leaseTerm;
// Adjust for time frame comparison (Cost per month of usage)
var buyCostPerMonth = netBuyCost / buyTerm;
var leaseCostPerMonth = totalLeaseCost / leaseTerm;
// Display Results
document.getElementById('resultsArea').style.display = 'block';
document.getElementById('totalBuyCostDisplay').innerText = '$' + netBuyCost.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('buyMonthlyDisplay').innerText = 'Monthly Loan: $' + monthlyLoanPayment.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('totalLeaseCostDisplay').innerText = '$' + totalLeaseCost.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('leaseMonthlyDisplay').innerText = 'Effective Monthly: $' + effectiveMonthlyLease.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
var recText = "";
if (buyCostPerMonth < leaseCostPerMonth) {
recText = "Buying is financially better in the long run, saving you approximately $" + (leaseCostPerMonth – buyCostPerMonth).toFixed(2) + " per month in ownership costs.";
} else {
recText = "Leasing currently offers a lower monthly net cost for this period, saving you approximately $" + (buyCostPerMonth – leaseCostPerMonth).toFixed(2) + " per month.";
}
document.getElementById('recommendationText').innerText = recText;
// Scroll to results
document.getElementById('resultsArea').scrollIntoView({ behavior: 'smooth', block: 'nearest' });
}