Lease vs Buy Car Calculator
Compare the total cost of leasing versus buying a car over the same ownership period.
How to use this tool
- Enter the monthly lease payment and any upfront cash due at signing.
- Enter the equivalent loan payment and down payment if buying.
- Enter the expected resale value of the vehicle at the end of the term.
- A positive difference means leasing costs more; negative means buying costs more.
Compare the true total cost of leasing versus buying to make the right financial decision.
Formula
Total lease cost ($) = Monthly lease payment × Term (months) + Lease down payment
Total buy cost, net ($) = Monthly loan payment × Term (months) + Purchase down payment − Resale value
Difference ($) = Total lease cost − Total buy cost (net)
How it works
This calculator compares the out-of-pocket cost of leasing versus buying over an identical period by summing all payments and upfront money for each option; the purchase cost is reduced by the estimated resale value at the end of the term to arrive at a net ownership cost.
A positive difference means leasing costs more than buying over the term; a negative value means leasing is cheaper. The model excludes interest rate effects, taxes, insurance, maintenance differences, and the opportunity cost of down payment capital, so treat the result as a directional estimate rather than a precise financial projection.
Worked example
Worked example
- Total lease cost: $400/mo × 36 months + $2,000 down = $16,400
- Total buy cost (gross): $500/mo × 36 months + $3,000 down = $21,000
- Net buy cost: $21,000 − $12,000 resale value = $9,000
- Difference: $16,400 − $9,000 = $7,400 (leasing costs more)
Over 36 months, leasing costs $16,400 versus a net buy cost of $9,000 — buying is $7,400 cheaper after accounting for the $12,000 resale value.
Key terms
- Lease
- A contractual arrangement where you pay to use a vehicle for a fixed term without owning it; at term end you return the car or purchase it at a predetermined price.
- Down payment (cap cost reduction)
- An upfront payment that reduces either the financed loan amount (purchase) or the monthly lease payment, paid at signing.
- Resale value
- The estimated market value of the purchased vehicle at the end of the comparison term, which offsets the total cost of ownership.
- Net buy cost
- The total purchase expenditure (payments + down payment) minus the resale value recovered at the end of the ownership period.
- Term (months)
- The duration of the lease or loan agreement; both options must use the same term for a fair cost comparison.
Frequently asked questions
- Is it cheaper to lease or buy a car?
- Buying is typically cheaper over the long run because you build equity and keep the vehicle's resale value. Leasing has lower monthly payments but you never own the car.
- What costs does the lease total include?
- This calculator adds all monthly payments plus upfront costs. It does not include insurance, maintenance, or disposition fees at lease end, which add to the true lease cost.