Lease vs Buy a Car Calculator
Figure basis: Illustrative assumptionCompare the real cost of leasing a car against financing the same car over the same number of months. Leasing only charges you for the years you drive it, so the cash cost is often lower in the short run, but you own nothing at the end. Buying costs more each month, yet you build equity: at the end you can sell the car or keep driving it with no payment. Enter your lease quote and your purchase quote below. The calculator totals each path over your comparison period and, for the buy option, subtracts the equity you would hold (estimated resale value minus any loan still owed) to give the true net cost. Every figure is your own input, so there is nothing to source; use it to test a dealer's "leasing is cheaper" claim against the numbers.
Over 36 months, leasing costs $19,200.00 and you own nothing; buying nets $23,170.09 after $6,187.64 of equity. Here, leasing is $3,970.09 cheaper over the period, but buying leaves you owning the car.
How to read the badges beside each field: Official figures come from a cited authority; Regional average and Illustrative assumption values are editable placeholders, so replace them with your own figure before you rely on the result.
How lease vs buy is calculated
Both options are measured over the same comparison period so the totals are comparable:
lease total = lease drive-off + monthly lease x period
loan payment = principal x r / (1 - (1 + r) ^ -loan term), r = APR / 12
buy paid = down payment + loan payment x months paid in period
loan balance at end = principal x (1 + r) ^ k - loan payment x ((1 + r) ^ k - 1) / r
equity = resale value - loan balance at end
buy net cost = buy paid - equity
Worked example
A $40,000 car over 36 months. Lease: $3,000 drive-off and $450 a month. Buy: $4,000 down, a 6.5% APR loan over 60 months, and an estimated $22,000 resale at 36 months:
- Lease total = $3,000 + $450 x 36 = $19,200.00
- Loan payment on $36,000 at 6.5% over 60 months = $704.38
- Buy paid over 36 months = $4,000 + $704.38 x 36 = $29,357.73
- Loan balance after 36 payments = $15,812.36, so equity = $22,000 - $15,812.36 = $6,187.64
- Buy net cost = $29,357.73 - $6,187.64 = $23,170.09
- Over 36 months leasing costs $3,970.09 less, but buying leaves you owning the car.
Every figure above is your own quote or estimate; nothing here is sourced from a third party, so change any input to match the deal in front of you.
The comparison that dealers rarely show you
A lease quote and a loan quote are not the same product, so comparing the two monthly payments side by side is misleading: the lease payment is lower because you are only paying for the slice of the car you use up, plus a finance charge, and handing it back at the end. The honest comparison is total cost over the same period with the equity counted, which is what this tool does. In the default example leasing wins by about $3,970 over three years, but that gap buys you nothing lasting: at month 37 the lease is over and you either sign a new one or walk. The buyer, meanwhile, owns a car worth roughly $22,000 and is two years from a paid-off loan.
That is why the answer flips with the holding period. Leasing tends to win if you genuinely want a new car every two to four years and value the predictable payment and warranty coverage. Buying wins decisively if you keep cars for many years, because the most expensive phase (the loan) ends while the car keeps working. Lengthen the comparison period in the calculator and watch the buy net cost fall below the lease total: the crossover point is the real decision, not the sticker payment.
Two lease traps do not show up in a monthly payment and are not modelled here: mileage limits (typically 10,000 to 15,000 miles a year, with per-mile charges over the cap) and wear-and-tear or early-termination fees. If you drive a lot or your plans might change, price those in before treating the lower lease number as the cheaper deal.
Lease vs buy: frequently asked questions
Is it cheaper to lease or buy a car?
Over a short period that matches the lease term, leasing usually has the lower cash cost, because you only pay for the depreciation and finance charge during those years, not the whole car. Buying costs more up front but builds equity: at the end you own a car you can sell or keep driving with no payment. This calculator compares the two over the same number of months and shows the net cost of buying after subtracting the equity you would hold.
How does this calculator make the comparison fair?
It measures both options over the same comparison period. For leasing it totals your drive-off amount plus every monthly payment. For buying it totals your down payment plus the loan payments made during that period, then subtracts your equity at the end (the car's estimated resale value minus any loan balance still owed). The result is the true out-of-pocket cost of each path over the same window.
Why does buying look more expensive here?
Because over a short window you are paying down a whole car while a lease only charges you for part of it. The gap narrows and then reverses the longer you keep the car: once the loan is paid off you drive with no payment, while a new lease starts a new payment every few years. Lengthen the comparison period in the calculator to see the point where buying wins.
What should I use for the resale value?
Use a realistic estimate of what the car would sell for at the end of your comparison period. A common rule of thumb is that a new car keeps roughly 50 to 60 percent of its value after three years, though this varies a lot by make and model. Because it is an estimate, the resale value is a clearly-labelled editable input; try a lower figure to stress-test the buy option.
Method and sources
- The comparison uses standard loan amortization and a straight total-cost method; every figure is your own quote or estimate, so no third-party data is used or required.
- For an independent explainer on the trade-offs, see the FTC consumer guidance on financing or leasing a car.
Reviewed by the CalculatorHub team, edited by James Graham, 28 July 2026. See our methodology. General information only, not financial advice. Mileage caps, wear charges and early-termination fees are not modelled.