Deciding whether to lease or buy a car is one of the most common financial dilemmas for drivers. While buying provides equity and ownership, leasing offers lower monthly payments and the ability to drive a new vehicle every few years.
How This Calculator Works
To provide a fair comparison, our calculator looks at the Total Cost of Ownership. This is critical because a monthly payment alone doesn't tell the whole story.
Buying: We calculate your monthly loan payment and total interest. We then subtract the estimated resale value at the end of the term to find your "net cost."
Leasing: We sum all monthly payments, down payments (capitalized cost reductions), and end-of-lease fees.
Realistic Example: The 5-Year Comparison
Imagine a $40,000 SUV:
Buying: $5,000 down, 6% interest for 60 months. Monthly payment: ~$676. Total spent: $45,560. Resale value after 5 years: $20,000. Net Cost: $25,560.
Leasing: Two consecutive 36-month leases at $500/mo. Total spent over 6 years: ~$36,000.
Pros and Cons of Buying
Pros:
Ownership: You own a tangible asset once the loan is paid off.
No Mileage Limits: Drive as much as you want without penalties.
Customization: You can modify the car as you wish.
Cons:
Higher Monthly Payments: Usually 30-50% higher than lease payments.
Depreciation: The car loses value the moment you drive it off the lot.
Maintenance: Once the warranty expires, you are responsible for all repairs.
Pros and Cons of Leasing
Pros:
Lower Payments: You only pay for the car's depreciation during the lease term.
New Tech: Access to the latest safety and entertainment features every 3 years.
Warranty Coverage: Most leases coincide with the factory warranty.
Cons:
Mileage Caps: Typically limited to 10,000–15,000 miles per year.
No Equity: You have nothing to show for your payments at the end.
Wear and Tear Fees: You may be charged for small dents or interior stains.
Frequently Asked Questions
Is it better to lease or buy for business use?
Leasing is often preferred for business owners because the entire lease payment may be tax-deductible if the car is used 100% for business. Consult with a CPA to verify current IRS rules.
What is the "Money Factor" in leasing?
The money factor is essentially the interest rate for a lease. To convert a money factor to an APR, multiply it by 2400.
function calculateLeaseBuy() {
// 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) || 0;
var buyTerm = parseFloat(document.getElementById('buyTerm').value) || 1;
var buyResale = parseFloat(document.getElementById('buyResale').value) || 0;
// Lease Inputs
var leaseMonthly = parseFloat(document.getElementById('leaseMonthly').value) || 0;
var leaseDown = parseFloat(document.getElementById('leaseDown').value) || 0;
var leaseTerm = parseFloat(document.getElementById('leaseTerm').value) || 1;
var leaseDeposit = parseFloat(document.getElementById('leaseDeposit').value) || 0;
var leaseFee = parseFloat(document.getElementById('leaseFee').value) || 0;
// Buying Calculation (Amortization)
var loanAmount = buyPrice – buyDown;
var monthlyRate = (buyRate / 100) / 12;
var buyMonthlyPayment = 0;
if (buyRate > 0) {
buyMonthlyPayment = (loanAmount * monthlyRate) / (1 – Math.pow(1 + monthlyRate, -buyTerm));
} else {
buyMonthlyPayment = loanAmount / buyTerm;
}
var totalPaidBuy = (buyMonthlyPayment * buyTerm) + buyDown;
var netCostBuy = totalPaidBuy – buyResale;
// Leasing Calculation
var totalCostLease = (leaseMonthly * leaseTerm) + leaseDown + leaseFee – leaseDeposit;
// Normalizing to per-month cost for a direct comparison
var monthlyNetBuy = netCostBuy / buyTerm;
var monthlyNetLease = totalCostLease / leaseTerm;
// Display Results
document.getElementById('result-area').style.display = 'block';
document.getElementById('totalBuyCost').innerText = '$' + netCostBuy.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('totalLeaseCost').innerText = '$' + totalCostLease.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('monthlyLoan').innerText = '$' + buyMonthlyPayment.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('netMonthlyBuy').innerText = '$' + monthlyNetBuy.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
var winnerTag = document.getElementById('winner-tag');
if (monthlyNetBuy < monthlyNetLease) {
winnerTag.innerText = "Financing is Financially Better!";
winnerTag.style.backgroundColor = "#d4edda";
winnerTag.style.color = "#155724";
} else {
winnerTag.innerText = "Leasing is Financially Better!";
winnerTag.style.backgroundColor = "#fff3cd";
winnerTag.style.color = "#856404";
}
}