Car Lease vs. Buy Comparison Calculator
Comparison Summary
Monthly Loan Payment:
Total Cost to Buy (over loan term):
Equity After Loan Term:
Total Cost to Lease (over lease term):
Should You Lease or Buy Your Next Car?
Deciding between leasing and buying a vehicle is one of the most significant financial decisions a driver makes. Both options have distinct advantages depending on your driving habits, budget, and long-term financial goals.
How the Math Works
When you buy a car, you are paying for the entire value of the vehicle plus interest. Once the loan is paid off, you own an asset that retains some resale value. Our calculator estimates this using the "Estimated Residual Value" percentage.
When you lease, you are essentially paying for the vehicle's depreciation during the time you drive it, plus interest (known as the money factor) and fees. You do not own the car at the end of the term, but your monthly payments are typically lower.
Key Factors to Consider
- Mileage: Leases usually limit you to 10,000–15,000 miles per year. If you commute long distances, buying is almost always better to avoid hefty overage fees.
- Customization: If you want to modify your car (tint, exhaust, tech upgrades), you must buy it. Leased cars must be returned in stock condition.
- Maintenance: Many new leases include GAP insurance and factory maintenance, reducing out-of-pocket repair costs during the term.
- The "Equity" Factor: The biggest advantage of buying is equity. Even though cars depreciate, having a car worth $15,000 after 5 years is a major financial win compared to returning a lease and having $0 in assets.
Real-World Example
Imagine a $40,000 SUV. If you buy with $5,000 down at 6% interest for 60 months, your payment is roughly $676. After 5 years, you've paid about $45,560 total, but the car might be worth $20,000. Your net cost of ownership is $25,560.
If you lease that same SUV for $500/month for 36 months with $3,000 down, your total cost is $21,000 for 3 years. Over 5 years (two consecutive leases), you would spend significantly more than the net cost of buying, though your monthly cash flow might be easier to manage.