Car Lease vs. Buy Calculator
Compare the true total cost of leasing versus buying a car over your chosen time horizon — accounting for loan payments, residual value, fees, and equity.
Vehicle
If Buying
If Leasing
First payment, taxes, acquisition fee.
% of MSRP at lease end (on contract).
Lease vs. Buy: The Real Comparison
Most people compare lease vs. buy on monthly payment alone — but that's misleading. A lease payment is always lower because you're only paying for the depreciation during the lease term, not the full vehicle. The right comparison is total money spent vs. total value received.
Why Buying Usually Wins Long-Term
When you buy, you eventually own an asset with resale value. Once the loan is paid off, your monthly car cost drops to insurance, maintenance, and fuel. Over a 10-year period, a car buyer typically pays far less than someone who perpetually leases.
When Leasing Makes Sense
- You value driving a new car every 2–3 years with the latest safety tech
- Low mileage driver (under 10,000–12,000 miles/year) — excess mileage penalties erode lease value
- Business owner who can deduct lease payments as a business expense
- Short time horizon — You don't want to commit to a vehicle for 5+ years
Lease Math Simplified
A lease payment is essentially:
Monthly payment ≈ (Capitalized Cost − Residual Value) ÷ Term + Finance Charge
The money factor (lease equivalent of APR) multiplied by 2,400 gives you the approximate APR. A money factor of 0.00200 equals roughly 4.8% APR.
Frequently Asked Questions
What happens at the end of a lease? You can return the car (and pay a disposition fee), buy it at the residual value, or trade/lease a new vehicle. If the car is worth more than the residual, you can profit by buying it and reselling.
What are common lease fees I should watch for? Acquisition fee ($500–$1,000), disposition fee ($300–$400 at lease end), excess mileage charges ($0.15–$0.30/mile over limit), and wear-and-tear charges for damage beyond normal use.
Does it make sense to put money down on a lease? Generally no — if the car is totaled or stolen, your insurer pays the residual, and you lose any cap cost reduction you paid. Keep your cash and invest it instead.
