Buy vs Lease a Car Calculator
Compare the true cost of buying vs leasing a vehicle over time. See year-by-year cost breakdown, equity buildup, and which option saves you more.
Buying Scenario
5.0 years
New cars: ~15-20%, used: ~10-15%
Leasing Scenario
3.0 years per lease
Fee when returning the lease
Estimated per-lease overage
Comparison Period
2 lease(s) over this period
Extra monthly insurance for owning
Maintenance covered by lease warranty
Buying is cheaper over 6 years
Save $6,618.98
Buy true cost: $30,481 · Lease true cost: $37,100
Cost Breakdown
Buy
Monthly Payment
$626.12
Total Paid
$45,567.00
Total Interest
$5,567.00
Car Value (year 6)
$15,085.98
True Cost (paid − residual)
$30,481.02
Lease
Monthly Payment
$450.00
Total Lease Payments
$32,400.00
Down Payments + Fees
$4,700.00
Vehicle Equity
$0.00
True Cost
$37,100.00
Year-by-Year True Cost
| Year | Buy Cost | Car Value | Buy True Cost | Lease True Cost | Winner |
|---|---|---|---|---|---|
| 1 | $15,513 | $34,000 | -$18,487 | $7,750 | Buy |
| 2 | $23,027 | $28,900 | -$5,873 | $13,150 | Buy |
| 3 | $30,540 | $24,565 | $5,975 | $18,550 | Buy |
| 4 | $38,054 | $20,880 | $17,173 | $26,300 | Buy |
| 5 | $45,567 | $17,748 | $27,819 | $31,700 | Buy |
| 6 | $45,567 | $15,086 | $30,481 | $37,100 | Buy |
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How to Use the Buy vs Lease Calculator
This calculator compares the full financial picture of buying vs leasing a car over a period you choose — not just the monthly payment, but the total true cost including depreciation, interest, fees, and residual value. The goal is to answer one question: which option leaves you spending less money overall?
Setting up the buying scenario: Enter the vehicle price, your down payment, loan interest rate, and loan term. Then set the annual depreciation rate — new cars typically depreciate 15-20% in the first year and 10-15% per year after that. This determines what the car is worth at the end of your comparison period, which is subtracted from your total cost to give you the true cost of buying.
Setting up the leasing scenario: Enter the down payment due at signing, monthly lease payment, and lease term. Include the disposition fee (charged when returning the vehicle, typically $300-$500) and any expected mileage overage charges. If you compare over a period longer than one lease, the calculator assumes you get a new lease each time on similar terms.
Fine-tuning the comparison: Set the years to compare — shorter periods favor leasing, longer periods favor buying. You can also add optional monthly cost differences: extra insurance cost for owning (owners often pay more) and maintenance savings from leasing (new leased cars are under warranty). These adjustments help you capture the full cost picture beyond just payments.
Reading the results: The verdict banner immediately tells you which option is cheaper and by how much. The side-by-side breakdown shows every cost component. The year-by-year table shows when (and if) buying becomes cheaper — look for where the winner column switches from “Lease” to “Buy.” Use the share button to save your scenario and compare multiple configurations.
Frequently Asked Questions
Is it cheaper to buy or lease a car?
It depends on how long you keep the vehicle. Buying is almost always cheaper over the long term (5+ years) because you build equity and eventually own the car outright with no monthly payments. Leasing is cheaper in the short term — lower monthly payments and down payment — but you never build equity and always have a payment. This calculator shows the exact crossover point where buying becomes cheaper based on your actual numbers.
What is the true cost of buying a car?
The true cost of buying is everything you pay minus what the car is worth when you sell or trade it in. This includes the down payment, all loan payments (principal + interest), insurance, and maintenance, minus the car's residual value at the end. A $40,000 car with $12,000 in interest that's worth $15,000 after 6 years has a true cost of about $37,000. This calculator tracks depreciation year by year to give you the precise true cost.
What costs are included in leasing?
Leasing costs include the down payment (due at signing), monthly lease payments, disposition fees (charged when you return the car, typically $300-$500), and any mileage overage charges. Most leases also require gap insurance. The advantage is that maintenance is often covered by the manufacturer's warranty during the lease term. The disadvantage is that after paying all of this, you own nothing.
How does depreciation affect the buy vs lease decision?
Depreciation is the key factor. New cars typically lose 15-20% of their value in the first year and about 10-15% each subsequent year. Cars that depreciate faster (luxury brands, certain models) make leasing relatively more attractive because you avoid absorbing the steepest depreciation. Cars that hold their value well (Toyota, Honda, some trucks) make buying more attractive because your residual value stays higher. Adjust the depreciation rate in this calculator to match the vehicle you're considering.
What happens if I want to keep the car after the lease ends?
Most leases include a purchase option at the end — you can buy the car at the residual value stated in your lease agreement. Whether this makes sense depends on the car's actual market value compared to the residual price. If the car is worth more than the buyout price, it can be a good deal. This calculator assumes you lease a new car each time the lease ends, which represents the most common leasing pattern.
Why does buying always win in the long run?
Once a car loan is paid off (typically 4-6 years), your only costs are insurance and maintenance. Meanwhile, a lessee is still making monthly payments on a new lease. The break-even point is usually 4-6 years — right around when the loan is paid off. After that, every year of driving a paid-off car makes buying increasingly cheaper. The year-by-year table in this calculator shows exactly when buying overtakes leasing for your specific scenario.