Car: Buy vs. Lease Calculator
NewCompare the real net cost of financing a car vs. leasing one.
Your lease ends after 36 months, but you're comparing over 60months. After the lease ends you'd need another lease or car — that cost isn't included, which makes leasing look cheaper than a truly like-for-like comparison would.
Leasing Saves You
$9,365.60
Buy Net Cost
$27,565.60
Lease Net Cost
$18,200.00
Net Cost After 5 Years
| Buy | Lease | |
|---|---|---|
| Monthly Payment | $634.92 | $450.00 |
| Due Upfront | $5,000.00 | $2,000.00 |
| Total Paid Over Period | $43,095.29 | $18,200.00 |
| Asset Value at End | +$15,529.69 | $0.00 (returned) |
| Remaining Loan Owed | −$0.00 | — |
| Net Cost | $27,565.60 | $18,200.00 |
Buying builds equity, leasing doesn't
When you finance a car, every payment builds a little equity — by the end you own an asset worth roughly $15,529.69 after 5 years of depreciation. When you lease, every payment is pure cost — you hand the car back with nothing to show for it, but you also never own a depreciating asset or worry about resale. Over this comparison period, leasing costs $9,365.60 less.
Frequently Asked Questions
Is buying a car always cheaper than leasing in the long run?
Usually yes, if you plan to keep the car for many years past the loan term — once it's paid off, you drive essentially payment-free while a lease keeps charging you forever (a new lease every 2-4 years). Leasing can still win over shorter comparison periods, or if you always want a newer car and value lower monthly payments and no resale hassle.
Why does this calculator warn me when the comparison period is longer than my lease term?
Because a lease's payments stop when the term ends, but real life doesn't — you'd need a new lease or a new purchase to keep driving. If we simply stopped counting lease costs at month 36 while still counting loan payments through month 60, leasing would look artificially cheap. The warning flags exactly when that's happening so you can judge the real trade-off.
What's a realistic annual depreciation rate for a car?
New cars typically lose 15-20% of value in the first year and roughly 10-15% per year after that, with wide variation by brand and model (some trucks and certain reliable brands hold value much better; luxury and electric vehicles often depreciate faster). 15%/year is a reasonable blended long-run default for this calculator.
Does the loan payment include sales tax?
Yes — this calculator adds sales tax to the amount financed (a common approach when tax is rolled into the loan rather than paid entirely upfront), based on the price after any trade-in value is subtracted, matching how most dealerships calculate it.
Why is my monthly lease payment usually lower than a loan payment for the same car?
Because a lease payment is based on the depreciation over the lease term (car's expected value loss) plus a finance charge — not the full purchase price. You're essentially only paying for the portion of the car's value you 'use up' during the lease, plus interest, which is why lease payments are often 20-40% lower than loan payments on the same vehicle.
What happens if I want to buy the car at the end of a lease?
Most leases include a buyout option at the pre-agreed 'residual value' set at signing. If the car turns out to be worth more than that residual value at lease-end, buying it out can be a great deal; if it's worth less, walking away and returning it is usually better. This calculator doesn't model a lease buyout scenario — it assumes you return the car.
Should I put more money down when buying vs. leasing?
A larger down payment on a loan directly reduces the amount you finance and the interest you pay — real equity from day one. A large down payment on a lease (a 'cap cost reduction') just lowers your monthly payment but doesn't build equity, and you lose that money entirely if the car is totaled or stolen early in the lease — many advisors recommend keeping lease down payments small or at zero for this reason.
Are there mileage limits I should account for with a lease?
Yes — most leases cap you at 10,000-15,000 miles per year, with per-mile penalties (often 15-30 cents/mile) for going over. If you drive significantly more than that, leasing can end up costing much more than the numbers here suggest; this calculator doesn't model mileage overage fees, so factor that in separately if it applies to you.