Lease vs. Buy Car Calculator

Leasing usually means a lower monthly payment; buying usually means you eventually own something. Beyond that headline, the real comparison depends on your numbers. Use the calculator below to model the purchase side of the decision, and read on for how to weigh it against a lease quote.

Leasing vs. Buying a Car: What's the Real Difference?

Buying a car with an auto loan means you're financing the entire purchase price (minus any down payment or trade-in), and once the loan is paid off, you own the vehicle outright with no further payments — and no restrictions on how many miles you drive or what condition you keep it in.

Leasing means you're only financing the vehicle's depreciation over the lease term — the difference between its price today and its projected residual value at lease-end — plus a rent charge (the lease equivalent of interest) and fees. You never own the car; at the end of the term, you return it (or pay to buy it at the pre-set residual value), and you're generally bound by an annual mileage limit and wear-and-tear standards.

Because a lease only finances the depreciation portion of the car's value, not the full price, the monthly payment is almost always lower than an equivalent auto loan payment on the same vehicle — but you have nothing to show for it at the end of the term besides the option to buy the car back.

Key Differences Between Leasing and Buying

• Monthly Payment: Lease payments are typically lower than loan payments on the same vehicle, since you're only paying for depreciation plus rent charge, not the full price.
• Ownership: Buying builds equity in an asset you'll own outright; leasing builds no equity — you're always paying for temporary use.
• Mileage and Wear Limits: Leases cap annual mileage (commonly 10,000-15,000 miles) and charge excess-mileage and excess-wear fees; owned vehicles have no such restrictions.
• Long-Term Cost: Keeping a purchased vehicle well past the loan payoff date is usually the cheapest option per mile, since you stop making payments entirely; repeatedly leasing new vehicles means payments never stop.
• Flexibility to Change Vehicles: Leasing makes it easy to drive a new vehicle every few years; buying (and later selling or trading in) requires more effort and carries resale-value risk.
• Total Cost If You Sell Early: Selling a financed vehicle early means settling the loan balance against the car's actual resale value, which can mean owing more than it's worth (negative equity) in the early years; ending a lease early usually triggers early-termination fees.

How to Use This Calculator to Compare Both Options

1. Model the Purchase Option

Enter the vehicle's price, your down payment or trade-in value, the loan's interest rate, and the loan term into the calculator above. Note the resulting monthly payment, total interest, and total cost.

2. Gather Your Lease Quote's Numbers

From a dealer's lease quote, note the monthly lease payment, any due-at-signing amount (down payment, taxes, and fees), the lease term in months, and the mileage allowance.

3. Compare Monthly Payments Over the Same Time Horizon

Compare the loan's monthly payment against the lease's monthly payment over the lease term specifically (for example, 36 months) rather than the full loan term, since that's the period during which both options are actually in effect.

4. Add Up the Full Cost of Each Path

For the loan, add the down payment to the total interest paid through that same time horizon. For the lease, add the due-at-signing amount to the sum of all monthly lease payments. Whichever total is lower, over the same number of months, is the cheaper option for that specific period — remembering that the loan path leaves you with an asset worth something at the end, while the lease path doesn't.

Which Should You Choose?

Buying tends to make more financial sense if you plan to keep the vehicle for many years past the loan payoff date, you drive more miles than a typical lease allows, or you want to build equity in an asset rather than pay indefinitely for temporary use.

Leasing tends to make more sense if you prefer driving a new vehicle every few years, you want the lowest possible monthly payment today, your annual mileage fits comfortably within lease limits, or you use the vehicle for business and can deduct lease payments as an expense.

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Tips for Comparing Lease and Buy Offers

1. Compare the Same Vehicle and Term: Get both a lease quote and a loan quote for the identical vehicle, trim, and term length so the comparison isn't distorted by different cars.
2. Read the Lease's Mileage Allowance Carefully: If you regularly drive more than the lease's annual limit, excess-mileage fees can erase any monthly savings.
3. Negotiate the Capitalized Cost, Not Just the Payment: A lease's "cap cost" functions like a purchase price — negotiate it the same way you'd negotiate a sale price, rather than focusing only on the advertised monthly payment.
4. Factor In How Long You'll Actually Keep the Car: The purchase math improves the longer you keep a paid-off vehicle; if you tend to trade in every 2-3 years anyway, the leasing-versus-buying gap narrows considerably.

Common Mistakes to Avoid

• Comparing Payments Without Comparing Terms: A 60-month loan payment against a 36-month lease payment isn't an apples-to-apples comparison — align the time horizon first.
• Ignoring End-of-Lease Costs: Excess mileage, wear-and-tear charges, and disposition fees at lease-end can add up and should be included in the total lease cost.
• Underestimating Total Loan Cost by Focusing on the Payment: A lower loan payment achieved by stretching the term means paying more total interest — model total cost, not just the monthly figure.
• Forgetting Resale Value on the Purchase Side: If you plan to sell or trade in a financed vehicle before payoff, the car's actual resale value (which can differ from the loan payoff amount) affects your real net cost.

Conclusion

Leasing and buying solve different problems: one minimizes your monthly payment and keeps you in a new car on a predictable cycle; the other builds equity in an asset you'll eventually own outright. Run the purchase numbers through the calculator above, line them up against your actual lease quote over the same time horizon, and choose based on the total cost and ownership outcome that matters most to you.