Should You Lease or Buy Your Next Car?
Deciding between leasing and buying a vehicle is a major financial decision that depends on your driving habits, budget, and how long you plan to keep the car. This calculator compares the total net cost of both options to help you see which one makes the most financial sense.
How the Comparison Works
To compare apples to apples, the calculator looks at the total out-of-pocket expense over the term of the loan or lease, adjusted for the vehicle's remaining value.
- Buying Calculation: We calculate your monthly loan payment based on the purchase price, down payment, and interest rate. The "Total Cost" is the sum of all payments plus the down payment, minus the estimated resale value of the car at the end of the term.
- Leasing Calculation: We sum the monthly payments, the amount due at signing, and any disposition fees charged when you return the vehicle. Since you don't own the car at the end, there is no resale value to subtract.
Buying Pros & Cons
Pros: Ownership equity, no mileage limits, and the freedom to modify the car or sell it whenever you want. In the long run, buying is usually cheaper because you eventually stop making payments.
Cons: Higher monthly payments, larger down payment requirements, and the risk of depreciation (the car losing value faster than expected).
Leasing Pros & Cons
Pros: Lower monthly payments, usually a lower down payment, and the ability to drive a new car every few years with the latest technology and safety features. Most repairs are covered by the manufacturer's warranty.
Cons: Mileage restrictions (usually 10,000 to 15,000 miles per year), you never own the asset, and you may face "wear and tear" charges at the end of the lease.
Example Scenario
Imagine a $35,000 sedan. If you buy it with $5,000 down at 5.5% interest for 60 months, your payment is roughly $573/month. After 5 years, you've spent about $39,380. If the car is worth $15,000 then, your net cost was $24,380.
If you lease that same car for $450/month for 36 months with $3,000 down, your total cost for those 3 years is $19,200. While the lease looks cheaper, you must remember that after the lease ends, you have $0 equity, whereas the buyer has a $15,000 asset.
function calculateComparison() {
// Buy Inputs
var bPrice = parseFloat(document.getElementById('buyPrice').value) || 0;
var bDown = parseFloat(document.getElementById('buyDown').value) || 0;
var bRate = parseFloat(document.getElementById('buyRate').value) || 0;
var bTerm = parseFloat(document.getElementById('buyTerm').value) || 0;
var bResale = parseFloat(document.getElementById('buyResale').value) || 0;
// Lease Inputs
var lMonthly = parseFloat(document.getElementById('leaseMonthly').value) || 0;
var lDown = parseFloat(document.getElementById('leaseDown').value) || 0;
var lTerm = parseFloat(document.getElementById('leaseTerm').value) || 0;
var lFees = parseFloat(document.getElementById('leaseFees').value) || 0;
// Buy Calculation (Loan Amortization)
var principal = bPrice – bDown;
var monthlyRate = (bRate / 100) / 12;
var buyMonthlyPayment = 0;
if (principal > 0) {
if (monthlyRate > 0) {
buyMonthlyPayment = principal * (monthlyRate * Math.pow(1 + monthlyRate, bTerm)) / (Math.pow(1 + monthlyRate, bTerm) – 1);
} else {
buyMonthlyPayment = principal / bTerm;
}
}
var totalBuyOutlay = (buyMonthlyPayment * bTerm) + bDown;
var netBuyCost = totalBuyOutlay – bResale;
// Lease Calculation
var netLeaseCost = (lMonthly * lTerm) + lDown + lFees;
// Display Results
document.getElementById('resultsArea').style.display = 'block';
document.getElementById('buyTotalDisplay').innerText = '$' + netBuyCost.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('buyMonthlyDisplay').innerText = 'Monthly Payment: $' + buyMonthlyPayment.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('leaseTotalDisplay').innerText = '$' + netLeaseCost.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
var verdictEl = document.getElementById('verdict');
// Normalize costs to monthly for fair comparison
var buyCostPerMonth = netBuyCost / bTerm;
var leaseCostPerMonth = netLeaseCost / lTerm;
if (buyCostPerMonth < leaseCostPerMonth) {
verdictEl.style.backgroundColor = '#dcfce7';
verdictEl.style.color = '#166534';
verdictEl.innerText = "FINANCIALLY BETTER: Buying is estimated to be cheaper by approximately $" + (leaseCostPerMonth – buyCostPerMonth).toFixed(2) + " per month in net costs.";
} else {
verdictEl.style.backgroundColor = '#ecfdf5';
verdictEl.style.color = '#065f46';
verdictEl.innerText = "FINANCIALLY BETTER: Leasing is estimated to be cheaper by approximately $" + (buyCostPerMonth – leaseCostPerMonth).toFixed(2) + " per month in net costs.";
}
}