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Lease vs Buy a Car Calculator

Leasing against buying over the lease term, comparing net cost after the car you still own. A lease payment is always lower than a loan payment, which is why comparing monthly figures answers the wrong question.

Also called: should i lease or buy a car, car lease vs loan.

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months
$
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months
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Which costs less
Leasing costs less

Leasing costs less over 36 months. Leasing costs $19,200.00 and buying costs $20,092.94 after the $19,250.00 the car is still worth.

Total spent on the lease
$19,200.00
Total spent buying
$26,959.61
Car value at the end
$19,250.00
Net cost of buying
$20,092.94
Equity you hold at the end
$6,866.67
Difference
$892.94
How this is calculated

An estimate, not an offer or a guarantee. Projected returns assume the rate you entered holds for the whole term, which no market does.

Method and background

This is what the calculation gives for the numbers you entered. It is an estimate, not advice, and it knows nothing about your situation beyond those numbers. Rules for United States change on a published schedule; the effective date is shown on every rule-based tool.

How this is calculated

A lease pays for depreciation over the term and returns the car. A loan pays for the whole car and leaves you owning it. Comparing the two fairly means measuring what you spent minus what you still have at the end, over the same number of months. The residual assumption drives everything: if the car holds its value better than assumed, buying wins by more.

buying costs the payments made less the car you still own; leasing costs every payment and leaves nothing
V_r
Resale value at the end of the term (currency)
B_r
Loan still outstanding (currency)

Worked examples

Each of these is asserted on every build. If a change to the engine ever moved one of these answers, the build would fail before the page could print it.

a typical three-year comparison

Vehicle price
$35,000.00
Lease: amount due at signing
$3,000.00
Lease: monthly payment
$450.00
Lease: term
36 months
Buy: down payment
$7,000.00
Buy: loan rate
7%
Buy: loan term
60 months
Value left at the end of the lease term
55%

Which costs lessLeasing costs less

arithmetic identity on both sides

Open this example

a car that holds all its value makes buying free

Vehicle price
$35,000.00
Lease: amount due at signing
$3,000.00
Lease: monthly payment
$450.00
Lease: term
36 months
Buy: down payment
$35,000.00
Buy: loan rate
7%
Buy: loan term
60 months
Value left at the end of the lease term
100%

Which costs lessBuying costs less

boundary: no depreciation and no loan means nothing was consumed

Open this example

a worthless car at the end costs its full price

Vehicle price
$35,000.00
Lease: amount due at signing
$3,000.00
Lease: monthly payment
$450.00
Lease: term
36 months
Buy: down payment
$35,000.00
Buy: loan rate
7%
Buy: loan term
60 months
Value left at the end of the lease term
0%

Which costs lessLeasing costs less

degenerate case

Open this example

Method and limits

What it assumes

  • The comparison runs over the lease term, with the loan balance at that point treated as still owed.
  • Insurance, maintenance and fuel are similar either way and are excluded.

What it deliberately does not model

  • Mileage penalties, wear charges and early termination fees are real lease costs and are not modelled.
  • Business tax treatment differs sharply between the two and is not applied.

Formula version 1.0.0 · definition 1.0.0 · United States · Report a problem with this calculator

Frequently asked questions

Why is the lease payment so much lower?
Because you are only paying for the value the car loses during the term, not for the car. At the end you have nothing, which is the part a monthly comparison hides.