Leasing vs. Buying a Car: Which Financial Choice is Better?
Deciding between leasing and buying a car involves more than just looking at the monthly payment. Each method represents a different financial strategy with distinct long-term outcomes. This calculator helps you compare the total out-of-pocket costs over a fixed period, accounting for depreciation, interest, and taxes.
Understanding the Calculation Logic
When you buy a car, your total cost is calculated by adding the down payment and all monthly loan payments, then subtracting the estimated resale value of the car at the end of the term. Even though your monthly outgoings are higher, you own an asset (the car) at the end.
When you lease a car, your cost is simply the total of the amount due at signing plus all monthly payments over the term. At the end of the lease, you return the vehicle and have no asset to sell, but you likely paid much less per month.
Key Factors to Consider
Mileage: Leases usually limit you to 10,000–15,000 miles per year. Buying has no such limits.
Maintenance: Lease terms often coincide with the factory warranty, meaning lower unexpected repair costs.
Ownership: Buying builds equity. Once the loan is paid off, you can drive for "free" (excluding maintenance) for years.
Flexibility: Leasing allows you to get a new car every 3 years without the hassle of selling or trading in.
Example Comparison
Consider a $35,000 SUV with a 3-year term:
Buying: $5,000 down, 5.5% interest. Monthly payment ~$960. Total paid: $39,560. Resale value after 3 years: $18,000. Net Cost: $21,560.
Leasing: $2,500 due at signing, $450/month. Total paid: $18,700.
In this scenario, leasing is cheaper by $2,860 over three years, but you don't own the vehicle at the end. If you planned to keep the car for 10 years, buying would almost always be the more economical choice.
function calculateComparison() {
// Inputs
var price = parseFloat(document.getElementById('vehiclePrice').value);
var taxRate = parseFloat(document.getElementById('salesTax').value) / 100;
var resaleVal = parseFloat(document.getElementById('resaleValue').value);
var term = parseFloat(document.getElementById('termMonths').value);
var buyDown = parseFloat(document.getElementById('buyDownPayment').value);
var buyRate = parseFloat(document.getElementById('buyInterest').value) / 100 / 12;
var leaseDue = parseFloat(document.getElementById('leaseDue').value);
var leaseMonthly = parseFloat(document.getElementById('leaseMonthly').value);
if (isNaN(price) || isNaN(term) || isNaN(leaseMonthly)) {
alert("Please enter valid numbers in all fields.");
return;
}
// Buying Logic
var totalWithTax = price * (1 + taxRate);
var loanAmount = totalWithTax – buyDown;
var buyMonthlyPayment = 0;
if (buyRate > 0) {
buyMonthlyPayment = (loanAmount * buyRate * Math.pow(1 + buyRate, term)) / (Math.pow(1 + buyRate, term) – 1);
} else {
buyMonthlyPayment = loanAmount / term;
}
var totalPaidBuying = (buyMonthlyPayment * term) + buyDown;
var netCostBuying = totalPaidBuying – resaleVal;
// Leasing Logic
var netCostLeasing = (leaseMonthly * term) + leaseDue;
// Display Results
document.getElementById('results').style.display = 'block';
document.getElementById('buyResult').innerHTML = '$' + netCostBuying.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('buyMonthly').innerHTML = 'Monthly Loan: $' + buyMonthlyPayment.toFixed(2);
document.getElementById('leaseResult').innerHTML = '$' + netCostLeasing.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('leaseMonthlyNote').innerHTML = 'Monthly Lease: $' + leaseMonthly.toFixed(2);
var verdict = document.getElementById('verdict');
if (netCostLeasing < netCostBuying) {
var diff = netCostBuying – netCostLeasing;
verdict.innerHTML = 'Leasing is $' + diff.toLocaleString(undefined, {maximumFractionDigits: 0}) + ' cheaper over ' + term + ' months.';
verdict.style.backgroundColor = '#effaf3';
verdict.style.color = '#27ae60';
} else {
var diff = netCostLeasing – netCostBuying;
verdict.innerHTML = 'Buying is $' + diff.toLocaleString(undefined, {maximumFractionDigits: 0}) + ' cheaper over ' + term + ' months.';
verdict.style.backgroundColor = '#eef7fd';
verdict.style.color = '#2980b9';
}
}