*Net cost accounts for the equity you retain when buying vs. returning the car when leasing.
Lease vs. Buy: Which Strategy Saves You More?
Deciding whether to lease or buy a new car is one of the most significant financial decisions for many households. While leasing offers lower monthly payments, buying allows you to build equity in an asset. This calculator helps you compare the "Net Cost" of both options by equalizing the timeframe and accounting for resale value.
The "Buy" Mathematics
When you buy a car, your total expenditure includes the down payment and all monthly loan payments (principal and interest). However, at the end of the term, you own the vehicle. To find the true net cost, we subtract the estimated resale value from your total payments. This represents the actual depreciation and interest cost you paid during ownership.
The "Lease" Mathematics
Leasing is essentially renting a vehicle for its most expensive years of depreciation. Your costs include the down payment (due at signing), every monthly payment, and any end-of-lease fees. Unlike buying, you have no asset to sell at the end, meaning your total cost is the sum of all payments made.
Example Comparison
Imagine a $35,000 SUV. Over 5 years (60 months):
Buying: $5,000 down + $573/month loan = $39,380 total spent. If you sell it for $15,000, your net cost is $24,380.
Leasing: $3,000 down + $450/month for 3 years, then starting a second lease for the remaining 2 years. The continuous payment cycle often results in a higher net cost over long periods because you never stop paying for depreciation.
Key Factors to Consider
Mileage: Leases usually limit you to 10,000 – 15,000 miles per year. Buying is better for high-mileage drivers.
Customization: If you like to modify your car, buying is the only option.
Peace of Mind: Leasing ensures the car is almost always under factory warranty.
function calculateComparison() {
// Buy Inputs
var buyPrice = parseFloat(document.getElementById("buyPrice").value);
var buyDown = parseFloat(document.getElementById("buyDown").value);
var buyTerm = parseFloat(document.getElementById("buyTerm").value);
var buyRate = parseFloat(document.getElementById("buyRate").value) / 100 / 12;
var resaleValue = parseFloat(document.getElementById("resaleValue").value);
// Lease Inputs
var leaseMonthly = parseFloat(document.getElementById("leaseMonthly").value);
var leaseDown = parseFloat(document.getElementById("leaseDown").value);
var leaseTerm = parseFloat(document.getElementById("leaseTerm").value);
var leaseFees = parseFloat(document.getElementById("leaseFees").value);
// Validation
if (isNaN(buyPrice) || isNaN(leaseMonthly) || buyTerm 0) {
monthlyLoanPayment = (loanAmount * buyRate * Math.pow(1 + buyRate, buyTerm)) / (Math.pow(1 + buyRate, buyTerm) – 1);
} else {
monthlyLoanPayment = loanAmount / buyTerm;
}
var totalLoanSpent = (monthlyLoanPayment * buyTerm) + buyDown;
var netBuyCost = totalLoanSpent – resaleValue;
// Lease Calculation
var totalLeaseSpent = (leaseMonthly * leaseTerm) + leaseDown + leaseFees;
// Normalizing for comparison (Cost per month)
var buyCostPerMonth = netBuyCost / buyTerm;
var leaseCostPerMonth = totalLeaseSpent / leaseTerm;
// Display Results
document.getElementById("results").style.display = "block";
document.getElementById("totalBuyResult").innerHTML = "$" + netBuyCost.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("buyMonthlyDetail").innerHTML = "Effective cost: $" + buyCostPerMonth.toLocaleString(undefined, {maximumFractionDigits: 0}) + "/mo";
document.getElementById("totalLeaseResult").innerHTML = "$" + totalLeaseSpent.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("leaseMonthlyDetail").innerHTML = "Effective cost: $" + leaseCostPerMonth.toLocaleString(undefined, {maximumFractionDigits: 0}) + "/mo";
var recBox = document.getElementById("recommendationText");
if (buyCostPerMonth < leaseCostPerMonth) {
var diff = leaseCostPerMonth – buyCostPerMonth;
recBox.innerHTML = "Buying is financially better! You save approx. $" + diff.toLocaleString(undefined, {maximumFractionDigits: 0}) + " per month in the long run.";
recBox.style.color = "#2980b9";
} else {
var diff = buyCostPerMonth – leaseCostPerMonth;
recBox.innerHTML = "Leasing is cheaper for this term! You save approx. $" + diff.toLocaleString(undefined, {maximumFractionDigits: 0}) + " per month.";
recBox.style.color = "#27ae60";
}
// Scroll to results
document.getElementById("results").scrollIntoView({ behavior: 'smooth', block: 'nearest' });
}