Lease vs Buy Car Calculator
Compare the true cost of leasing versus buying a car over the same term, accounting for the resale value you keep when you buy.
How to use this tool
- Choose the comparison term in months.
- Enter the lease drive-off cash and monthly lease payment.
- Enter the purchase price, down payment, and monthly loan payment.
- Enter the car's expected resale value and any loan balance at term end.
- Read the buy advantage and which option costs less.
Leasing has a lower monthly payment, but buying lets you keep the car's resale value. This calculator compares the true total cost of each over the same term so you can see which is actually cheaper.
Formula
Lease cost is everything you pay and never get back:
Lease cost = Drive-off + Monthly lease × Term
Buy cost subtracts the equity you keep at the end (resale value minus any loan still owed):
Equity = Resale value − Loan balance
Net buy cost = Down + Monthly loan × Term − Equity
Buy advantage = Lease cost − Net buy cost (positive means buying is cheaper).
How it works
Leasing and buying look different month to month, so the only fair comparison is total cost over the same period. Leasing is pure expense: every dollar of drive-off cash and every monthly payment is gone for good when you hand the keys back. Buying costs more per month, but a chunk of that money builds equity you recover when you sell or trade the car.
This calculator totals each path and then credits the buyer with end-of-term equity — the car's resale value minus any loan still owed. The difference is the 'buy advantage': a positive number means buying costs less over the term, a negative number favors leasing. The break-even hinges almost entirely on how well the car holds its value, which is why low-depreciation models tend to be better buys.
The comparison is on a cash basis and does not discount future dollars or count mileage overage fees, lease wear-and-tear charges, or the opportunity cost of the down payment. Leasing can still win for drivers who want a new car every few years, value predictable costs, or can write off a business lease — those are preferences the raw dollar total can't capture.
Worked example
36-month lease ($2,000 + $400/mo) vs buy ($32,000, $4,000 down, $550/mo)
- Lease cost = $2,000 drive-off + $400 × 36 = $2,000 + $14,400 = $16,400.
- Buy outlay = $4,000 down + $550 × 36 = $4,000 + $19,800 = $23,800.
- End-of-term equity = $18,000 resale − $4,000 loan balance = $14,000.
- Net buy cost = $23,800 − $14,000 = $9,800.
- Buy advantage = $16,400 − $9,800 = $6,600 → buying is cheaper.
Buy advantage $6,600.00 | Total lease cost $16,400.00 | Net buy cost $9,800.00 | Buying is cheaper
What drives the result
| Factor | Favors leasing | Favors buying |
|---|---|---|
| Depreciation | Fast (car loses value quickly) | Slow (car holds value) |
| Ownership length | Short (2-3 years) | Long (keep 6+ years) |
| Annual mileage | Low (under lease cap) | High (over lease cap) |
| Monthly cash flow | Lower payment preferred | Higher payment OK |
Key terms
- Drive-off / cap cost reduction
- The cash due at lease signing, including any down payment, first month's payment, and fees.
- Residual value
- The lease's predicted end-of-term value, which sets the lease payment; for buyers it's the resale value.
- Equity
- For a buyer, the car's resale value minus the remaining loan balance — the money you get back at the end.
- Depreciation
- The loss in a vehicle's value over time, the single biggest factor in whether leasing or buying wins.
Frequently asked questions
- Is it cheaper to lease or buy a car?
- Over a single term, buying is usually cheaper because you keep the car's resale value, while every lease dollar is spent. Leasing can win when the car depreciates fast or you replace vehicles every few years.
- What costs does this comparison leave out?
- It ignores lease mileage-overage and wear charges, the opportunity cost of cash, and the convenience of always driving a newer car under warranty. Add those qualitatively to the dollar result.
- Why does resale value matter so much?
- Resale value is the equity a buyer recovers at the end. A car that holds its value makes buying far cheaper; a car that depreciates quickly narrows or reverses the gap.