Car Lease vs. Buy Calculator
Compare the total cost of ownership to decide which financing option fits your budget.
Comparison Summary
Buying (Loan)
Monthly Payment
Net Cost (Cost – Resale)
Leasing
Monthly Payment
Total Cost over Term
Lease vs. Buy: Which is Right for You?
Deciding whether to lease or buy a car is one of the most significant financial decisions for many households. While buying a car is often seen as a long-term investment in an asset, leasing offers lower monthly payments and the opportunity to drive a new vehicle every few years.
The Mathematics of Buying
When you buy a vehicle, you are paying for the entire value of the car plus interest. However, at the end of the loan term, you own a tangible asset. To calculate the true cost of buying, you must subtract the estimated resale value of the car from the total amount paid in principal and interest.
- Pros: No mileage limits, ownership equity, no customization restrictions.
- Cons: Higher monthly payments, depreciation risk, repair costs after warranty.
The Mathematics of Leasing
Leasing is essentially renting a car for a fixed period. You are only paying for the vehicle's depreciation during the time you drive it, plus rent charges (interest) and fees. Because you aren't paying for the full value of the car, the monthly payments are typically lower.
- Pros: Lower monthly payments, always under warranty, latest technology.
- Cons: Mileage limits (usually 10k-15k per year), no equity, potential wear-and-tear fees.
Example Comparison
Imagine a $35,000 SUV. If you buy it with $5,000 down at 5.5% for 60 months, your payment is roughly $573. Over 5 years, you pay $34,380 in payments. If the car is worth $15,000 at the end, your net cost is $19,380 plus your down payment ($24,380 total).
If you lease that same SUV for $450 a month for 36 months with $2,500 down, you spend $18,700 over 3 years. To compare fairly with the 5-year loan, you would need to look at the "cost per month" over the life of the agreement.