Car Buying
Lease vs Buy Calculator
Compare the total cost of leasing against buying and keeping the same car over the lease term.
How this comparison works
Leasing cost is straightforward: your down payment plus every monthly payment for the lease term, since you return the car at the end with no equity. Buying is different because you still own an asset when the term ends. This calculator estimates the resale value of the purchased car at the same point in time and subtracts it from what you paid, so you are comparing “total cost to lease” against “true net cost to own for the same period,” which is exactly what this lease vs buy calculator is built to show you.
Tip: the resale-value field is the most important number in this calculator. Check recent private-party listings for the same year, make, model, and mileage, Kelley Blue Book is a good starting point, to get a realistic figure rather than guessing.
What leasing does not show you upfront
| Cost | Typical range |
|---|---|
| Mileage overage | $0.15-$0.30 per mile over your annual limit |
| Excess wear and tear | $0-$2,000+ at turn-in inspection |
| Acquisition fee | $395-$995, usually rolled into payments |
| Disposition fee | $300-$500 if you do not lease again from the same brand |
These fees are why two lease offers with the same monthly payment can end up costing very different amounts. Always ask for the money factor, residual value, and full fee schedule before signing.
The mistake that skews most lease-vs-buy comparisons
The most common error isn’t in the math, it’s in what gets typed into the boxes: comparing different trims or packages instead of the same car on both sides, ignoring the mileage limit so a lease priced around 10,000 miles a year looks artificially cheap if you actually drive 15,000, guessing at the resale-value field instead of pulling real listings, and comparing mismatched terms, a 36-month lease against a 72-month loan isn’t a fair fight until you account for the extra years of ownership on the buy side.
What happens if you keep the car past the loan term
This lease vs buy calculator compares costs over the same window, which is the right way to run the numbers, but the comparison stops the moment that window ends. A lease ends at 60 months and you either hand back the keys or start a new payment. A purchased car doesn’t stop being useful just because the loan is paid off, keep driving it for another two or three years covering only fuel, insurance, and maintenance with no payment at all, and the effective cost per year of ownership keeps falling. If you know you tend to keep cars well past the loan term, mentally add that stretch of payment-free years to the buy side before trusting the total-cost comparison at face value.
How a lease payment is actually built
A lease payment isn’t just “price divided by months,” it’s built from two separate pieces: a depreciation charge (the difference between the vehicle’s negotiated price and its residual value, spread across the term) and a rent charge (the leasing company’s built-in finance cost, expressed as a money factor instead of an APR). To translate a money factor into something roughly comparable to a loan rate, multiply it by 2,400; a money factor of 0.00125, for example, works out to an APR-equivalent of about 3%.
Say a $35,000 car has a residual value set at 55% of MSRP after 36 months, meaning the leasing company expects it to be worth about $19,250 at turn-in. The depreciation portion of your payment covers that roughly $15,750 gap over 36 months, before the rent charge and any taxes or fees are layered on top. A higher residual value, common on models that hold their value well, directly lowers your monthly payment, since there is less depreciation to cover, independent of the interest-like rent charge.
Because so much of the payment depends on the residual value assumption, not just the price you negotiate, two dealers can quote different monthly payments on the identical car and term. This is also part of why gap insurance, covering the difference between what you owe and what the car is worth if it’s totaled, is often bundled into a lease automatically, while on a purchased car it’s usually an optional add-on you decide on separately.
Is it cheaper to lease or buy a car?
Buying is almost always cheaper over the long run because you build equity and can keep driving the car after the loan is paid off. Leasing can look cheaper month to month, but you own nothing at the end and simply start a new payment cycle.
What are the hidden costs of leasing?
Mileage overage fees (often 15-30 cents per mile over your annual limit), wear-and-tear charges at turn-in, acquisition and disposition fees, and gap insurance requirements are the most common costs that do not show up in the advertised monthly payment.
When does leasing make more sense?
Leasing can make sense if you want a new car every 2-3 years, drive low annual mileage, use the car for business (where lease payments may be deductible), or want to avoid resale hassle. It rarely makes sense if you drive high mileage or plan to keep a car long term.
What if I need to end a lease or loan early?
Ending either one early usually costs money, but differently. Getting out of a lease early typically means paying the remaining payments in a lump sum or a penalty set by the leasing company. Paying off a loan early usually just means paying the remaining principal, with no extra penalty on most modern auto loans.
What is a money factor and how does it compare to an interest rate?
A money factor is how leasing companies express the finance charge built into your payment, usually a small decimal like 0.00125 instead of a percentage. To roughly translate it into an APR-equivalent, multiply the money factor by 2,400. A lower money factor, like a lower APR, means less finance cost baked into your monthly payment.