Compare the total cost of ownership to decide which financing option is right for you.
Financing (Buying)
Leasing
Metric
Buying
Leasing
Monthly Payment
$0.00
$0.00
Total Out-of-Pocket
$0.00
$0.00
Equity/Resale Value
$0.00
$0.00
Net Cost of Ownership
$0.00
$0.00
function calculateLeaseVsBuy() {
// Buy Inputs
var buyPrice = parseFloat(document.getElementById("buyPrice").value) || 0;
var buyDown = parseFloat(document.getElementById("buyDown").value) || 0;
var buyInterest = parseFloat(document.getElementById("buyInterest").value) || 0;
var buyTerm = parseFloat(document.getElementById("buyTerm").value) || 0;
var buyResale = parseFloat(document.getElementById("buyResale").value) || 0;
// Lease Inputs
var leaseMonthly = parseFloat(document.getElementById("leaseMonthly").value) || 0;
var leaseTerm = parseFloat(document.getElementById("leaseTerm").value) || 0;
var leaseDown = parseFloat(document.getElementById("leaseDown").value) || 0;
var leaseEndFee = parseFloat(document.getElementById("leaseEndFee").value) || 0;
// Calculate Buy Monthly Payment (Standard Loan Formula)
var principal = buyPrice – buyDown;
var monthlyRate = (buyInterest / 100) / 12;
var buyMonthlyPayment = 0;
if (monthlyRate > 0) {
buyMonthlyPayment = principal * (monthlyRate * Math.pow(1 + monthlyRate, buyTerm)) / (Math.pow(1 + monthlyRate, buyTerm) – 1);
} else {
buyMonthlyPayment = principal / buyTerm;
}
var totalBuyPayments = buyMonthlyPayment * buyTerm;
var totalBuyOutPocket = totalBuyPayments + buyDown;
var netBuyCost = totalBuyOutPocket – buyResale;
// Calculate Lease Costs
var totalLeasePayments = leaseMonthly * leaseTerm;
var totalLeaseOutPocket = totalLeasePayments + leaseDown + leaseEndFee;
var netLeaseCost = totalLeaseOutPocket; // No equity in a lease
// Adjusting for timeframes (Normalize to the longer term for fair comparison)
// For simplicity in this tool, we compare the total "Net Cost" over their respective terms.
document.getElementById("resBuyMonthly").innerHTML = "$" + buyMonthlyPayment.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("resLeaseMonthly").innerHTML = "$" + leaseMonthly.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("resBuyTotalOut").innerHTML = "$" + totalBuyOutPocket.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("resLeaseTotalOut").innerHTML = "$" + totalLeaseOutPocket.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("resBuyEquity").innerHTML = "$" + buyResale.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("resLeaseEquity").innerHTML = "$0.00";
document.getElementById("resBuyNet").innerHTML = "$" + netBuyCost.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("resLeaseNet").innerHTML = "$" + netLeaseCost.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
var verdict = document.getElementById("verdictText");
if (netBuyCost < netLeaseCost) {
verdict.innerHTML = "Buying is financially better by $" + (netLeaseCost – netBuyCost).toLocaleString(undefined, {maximumFractionDigits: 0}) + "!";
verdict.style.backgroundColor = "#d4edda";
verdict.style.color = "#155724";
} else {
verdict.innerHTML = "Leasing is financially better by $" + (netBuyCost – netLeaseCost).toLocaleString(undefined, {maximumFractionDigits: 0}) + "!";
verdict.style.backgroundColor = "#fff3cd";
verdict.style.color = "#856404";
}
document.getElementById("results").style.display = "block";
}
Lease vs. Buy: Which Car Financing Option is Better?
Deciding whether to lease or buy a car is one of the most significant financial decisions a household makes. Both options have distinct advantages, but the "right" choice depends heavily on your driving habits, financial goals, and how long you intend to keep the vehicle.
The Real Cost of Buying a Car
When you buy a car, you are financing the entire cost of the vehicle. Once the loan is paid off, you own the asset outright. The primary benefit of buying is equity. After 5 or 6 years, you can sell the car or trade it in, using that value toward your next purchase. However, buying typically requires a higher down payment and higher monthly payments because you are paying off the full principal plus interest.
The Real Cost of Leasing a Car
Leasing is essentially "renting" the car for its most expensive years (the first 3 years). You are only paying for the depreciation that occurs during your lease term, plus interest (known as the money factor). This leads to lower monthly payments. The downside? You never own the car, you are restricted by mileage limits, and you may face "disposition fees" or "excess wear and tear" charges at the end of the term.
Key Factors to Consider
Annual Mileage: Most leases limit you to 10,000 or 12,000 miles per year. If you commute long distances, buying is almost always better.
Maintenance: Lease terms usually overlap with the manufacturer's warranty, meaning you'll likely have zero major repair costs.
Customization: If you like to modify your vehicle, you must buy. Leased vehicles must be returned in "stock" condition.
Cash Flow: If you need a lower monthly payment today to free up cash for other investments, leasing can be a powerful tool.
How to Use This Calculator
To get an accurate comparison, input the vehicle price and your expected loan terms on the left. On the right, input the specific lease offer you've received from the dealer. The Net Cost of Ownership is the most important number; it calculates exactly how much money leaves your pocket permanently after accounting for the resale value of the car if you bought it.
Example Comparison
If you buy a $35,000 car with $5,000 down at 5.5% interest for 60 months, your payment will be roughly $573. After 5 years, you might sell it for $15,000. Your net cost was roughly $24,400. If you leased that same car for $400/month for two back-to-back 36-month terms, your total cost over a similar period would likely exceed $30,000, but you would have had a new car every three years.