Car Lease vs. Buy Calculator
Compare the total cost of ownership to decide which financing option saves you more money.
Financing / Buying Options
Leasing Options
Total Cost to Buy & Own:
Total Cost to Lease:
Leasing vs. Buying: Which is Better for Your Wallet?
Deciding between leasing and buying a car is one of the most significant financial decisions for drivers. While buying leads to ownership and equity, leasing often offers lower monthly payments and the opportunity to drive a new vehicle every few years.
How the Comparison Works
To accurately compare leasing and buying, you must look at the Total Cost of Ownership (TCO) over a specific period. Our calculator evaluates:
- Depreciation: The biggest cost in car ownership. If you buy, you lose the difference between the purchase price and resale value.
- Interest and Fees: Finance charges for loans versus acquisition fees for leases.
- Equity: When you buy, the car has a residual value you pocket at the end. When you lease, you return the asset with zero equity.
Example Calculation
Suppose you look at a $35,000 sedan over 36 months:
- Buying: $5,000 down, a 5.5% loan results in monthly payments of approx. $900. After 3 years, you've paid roughly $37,400. If you sell the car for $20,000, your net cost is $17,400.
- Leasing: $2,000 down, $450/month for 36 months plus $1,000 in fees. Your net cost is $19,200.
In this scenario, buying saves you $1,800 over three years because the equity you keep outweighs the higher monthly cash flow.
Key Factors to Consider
Mileage Limits: Leases usually limit you to 10,000–12,000 miles per year. Exceeding this can cost $0.20 per mile or more.
Maintenance: Newer leased cars are often under warranty, potentially lowering repair costs compared to long-term ownership.
Tax Benefits: If you use the vehicle for business, leasing may offer more straightforward tax deductions in some jurisdictions.