Lease vs Buy Calculator

How It Works

Leasing and buying answer different questions, which is why comparing the monthly payments misleads. A lease payment buys you the use of a car for a fixed period and nothing at the end: when the term is over, you hand the car back. A loan payment buys you ownership: when the loan is done, the car is yours, and even before then you can sell it and keep whatever is left after paying off the balance. This calculator compares the two over the same period — the lease term — by adding up the total cost of each side.

On the leasing side, the total is the down payment, the fees at signing, every monthly payment, and the disposition fee at return. On the buying side, the total is the down payment plus every loan payment made during the same period, minus the equity you recover by selling the car at the end: the resale value minus the loan balance still owed. Whichever total is lower wins. The resale value is the number that decides it, so the calculator shows how the answer changes as the resale value moves.

Worked Example

Take a $35,000 car. Leasing it costs $399 a month for 36 months, with $2,000 down, a $650 acquisition fee and a $395 disposition fee. The payments total $14,364.00, and the full lease cost is $17,409.00 — with nothing to show for it at the end. Buying it means $5,000 down and a $30,000 loan at 7% over 60 months, which is $594.04 a month. Over 36 months you pay $26,385.29 in down payment and loan payments, and after 36 payments the loan balance is $13,267.85. Sell the car for $20,000 and you recover $6,732.15 of equity, so the net cost of buying is $19,653.15. Leasing is cheaper by $2,244.15 in this example — but only because the resale value is $20,000.

The breakeven resale value is $22,244.15: if the car is worth more than that after three years, buying wins; if it is worth less, leasing wins. That single number is the most useful output of the whole comparison, because it turns an uncertain guess about resale value into a clear threshold you can judge against real used-car prices.

Assumptions

• Both options are compared over the lease term (36 months in the example). The buyer is assumed to sell the car at the end of that period.
• The resale value is your estimate of the car's market value at the end of the lease term. It is the biggest uncertainty in the comparison.
• The loan rate stays fixed, and loan payments are made on schedule for the whole comparison period.
• Lease mileage stays within the allowance. Excess-mileage charges, typically $0.15 to $0.30 per mile over the limit, are not included.
• Insurance, maintenance, fuel and registration are assumed to be the same for both options and are not counted. In practice, leased cars often require higher insurance coverage, and buyers keep maintenance costs after the warranty ends.

What this calculator leaves out: the lease buyout option (buying the car at the end of the lease at the residual value), sales tax treatment (which varies by state and differs between leasing and buying), gap insurance, wear-and-tear charges at lease return, and what happens after the comparison period — a buyer who keeps the car for years after the loan ends pays nothing at all for transport, while a lessee starts a new lease and a new payment.

The resale value decides everything. The table below shows the worked example at five resale values, against the fixed lease total of $17,409.00:

Every $1,000 of resale value is $1,000 off the net cost of buying, so the answer swings fast. A car that holds its value well — some models depreciate far more slowly than others — favours buying; a car that drops steeply favours leasing, because the leasing company, not you, takes the depreciation risk.

How to Use This Calculator

Fill in the lease side first: the monthly payment, term, down payment and fees from your lease quote. Then fill in the buying side: the down payment you would make, the loan rate and term you can get, and your best estimate of the car's resale value at the end of the lease term — check what three-year-old versions of the same model actually sell for. The headline result is the verdict and the difference, with the full breakdown underneath: lease total, loan payment, remaining balance, equity recovered and net buying cost.

Then move the resale value up and down. If buying only wins when the resale value is optimistic, the lease is the safer bet; if buying wins even at a pessimistic resale value, the purchase is clearly better. The breakeven resale value in the results gives you the exact threshold to compare against real market prices.

Tips and Practical Advice

Be honest about your mileage. Leases typically allow 10,000 to 12,000 miles a year, and excess mileage is charged per mile — 5,000 extra miles a year at $0.25 a mile is $3,750 over a three-year lease, which can wipe out the lease's advantage entirely. If you drive a lot, buying is usually the better choice, or negotiate a higher-mileage lease up front.

Think beyond the comparison period. This calculator compares three years, but the real financial case for buying is what happens in years four to ten: once the loan is paid off, you drive for free except for running costs, while a lessee signs a new lease and keeps paying forever. If you are the kind of person who keeps a car for a decade, buying wins by a much larger margin than the three-year comparison shows.

Finally, do not put a large amount down on a lease. A down payment on a lease only lowers the monthly payment — it does not build equity, and if the car is written off early, that money is generally gone. Keep lease drive-off costs low, and put the cash you would have used as a down payment somewhere it stays yours.

Sources: figures are calculated from the lease terms, loan terms and resale value you enter; no external rate data is used. Excess-mileage charges are typically $0.15–$0.30 per mile — check your lease agreement. Last reviewed: 13 November 2026.

Frequently Asked Questions