π Lease vs Buy Car Calculator
The real numbers behind leasing and buying, over the years you actually keep the car.
If You Buy
If You Lease
Verdict
Estimates for planning only, not financial advice. Assumes a replacement lease starts when each lease ends, and 15% annual depreciation for the purchased car.
How to Use This Calculator
Fill in the purchase side (price, down payment, loan terms) and the lease side (monthly payment, term, upfront costs), then set how many years you plan to keep driving. The calculator totals what each path costs over that period, subtracts the equity you would own if you bought, and tells you which is cheaper.
Enter the Car Price and Years of Ownership. Be honest about how long you keep cars: 3 years favors leasing, 8 years strongly favors buying.
On the buying side, enter your Down Payment, Loan APR, and Loan Term. The calculator amortizes the loan month by month over your ownership period.
On the leasing side, enter the Lease Payment, Lease Term, the Lease Down Payment, and all Lease Fees (acquisition, disposition, dealer fees). If your ownership period outlasts one lease, the calculator assumes you roll into a replacement lease on the same terms.
Compare the net costs. The verdict is based on total out-of-pocket cost minus the equity you would hold if you bought, since that equity is real money you keep.
Leasing vs Buying: The Real Trade-Offs
Leasing is essentially a long-term rental with a fixed return date. You pay for the depreciation you use plus interest (called the money factor) and fees, and at the end you hand the keys back with nothing to show for it. The appeal is a lower monthly payment, a new car every few years, warranty coverage the whole time, and no hassle selling a used car. The costs are mileage caps, wear-and-tear charges, mandatory full-coverage insurance, and the fact that you start over with zero equity every cycle.
Buying means higher payments and the eventual headache of selling or trading in, but every payment builds ownership. Once the loan is paid off, your transportation cost drops to insurance, maintenance, and fuel. That payment-free stretch is where buying wins big: a buyer who keeps a car three years past payoff saves roughly the entire lease payment stream a lessee keeps paying. This is why the ownership horizon dominates the verdict more than any other input.
Worked Example
$35,000 car, $5,000 down, 6.9 percent APR, 60-month loan: the loan is $30,000, monthly payment about $592. Over 5 years the buyer pays $5,000 down plus 60 payments of $592 = $40,520 out of pocket. The loan is fully paid, and the car depreciated at 15 percent a year is worth about $15,530, so ending equity is $15,530. Net buy cost = $40,552 - $15,530 = $25,022.
The lease side: $450/month, 36-month term, $3,000 down, $1,000 in fees per lease. Over 5 years (60 months) that is two lease cycles: 2 x ($3,000 + $1,000) + $450 x 60 = $35,000, with zero equity at the end. Buying wins by about $10,000 over 5 years. Shorten the horizon to 3 years and the race tightens considerably, which is exactly the calculation this tool runs for your numbers.
When Leasing Actually Makes Sense
Leasing is rational in a few situations. If you genuinely want a new car every 2 to 3 years, leasing is usually cheaper than the buy-and-trade-in treadmill, since you avoid depreciation hits and sales hassle. Business owners who can deduct lease payments sometimes come out ahead. And if you drive predictably few miles, stay within the mileage cap, and keep the car pristine, lease-end charges stay small. Just remember the two traps: never put a large down payment on a lease (that money vanishes if the car is totaled), and never sign without reading the excess mileage and wear charges, because those are where leases quietly get expensive.
Estimates for planning only, not financial advice.
Frequently Asked Questions
Is it cheaper to lease or buy a car?
Over the long run, buying is almost always cheaper because you end up owning an asset. Leasing wins for people who want a new car every 2 to 3 years and would be trading in anyway. This calculator compares the two over your specific ownership period, so if you plan to keep a car for 8 years, buying wins by a wide margin.
What happens to my equity if I lease?
You build none. Every lease payment is gone forever, like rent. When you buy, each payment reduces your loan balance while the car keeps some resale value, and the difference between the two is your equity. After 5 years on a typical loan, that equity is often worth several thousand dollars.
Do mileage limits make leasing more expensive?
They can. Most leases allow 10,000 to 12,000 miles a year, and excess miles cost $0.15 to $0.30 each. Driving 18,000 miles a year on a 12,000-mile lease costs you an extra $900 to $1,800 a year at turn-in. If you drive a lot, buy the car or negotiate a high-mileage lease up front.
What are acquisition and disposition fees?
The acquisition fee ($400 to $900) is charged by the leasing company to set up the lease, and the disposition fee ($300 to $500) is charged when you return the car. Both are pure cost with no value to you. Always ask for the itemized fee list before signing, because these fees vary by lender and are sometimes negotiable.
Can I buy my car at the end of the lease?
Usually yes, at the residual value written into your contract plus any purchase fee. Sometimes this is a good deal: if the car's market value is higher than the residual, you buy below market. More often the residual is optimistic and you would overpay, so check used-car listings before deciding.
How does a down payment differ between leasing and buying?
On a purchase, a bigger down payment reduces your loan and your interest cost, and you get it back as equity when you sell. On a lease, a big upfront payment (cap cost reduction) only lowers your monthly bill; if the car is totaled or stolen, that money is generally lost. That is why experts suggest putting as little down as possible on a lease.