Lease vs Buy Calculator
Which option saves you more money?
Compare total costs over your intended ownership period.
Use This Calculator in Minutes
Compare total costs over your intended ownership period. See which option saves you more money based on your driving habits and budget.
Use this for
- Frequent upgraders
- High-mileage commuters
- Business owners
You will get
- Total cost comparison
- Monthly payment breakdown
- Mileage penalty analysis
Quick Result
Save $13,592.87
Over 5 years by buying
Based on
- • Vehicle Price: $35,000.00
- • Ownership Period: 5 years
- • Annual Mileage: 12,000 miles
1Vehicle & Usage
Buy Option
Lease Option
Save $13,592.87
Over 5 years by buying
Buy
Lease
Mileage Warning
At 12,000 miles/year, you'll exceed the lease limit by 36,000 miles over 5 years, costing an extra $9,000.00 in fees.
Cost Breakdown Comparison
Negative values represent money back (resale value)
Decision Factors Based on Your Inputs
Lease-friendly
Neutral
Buying Only
Leasing Wins
Bottom Line
Buying saves you $13,592.87 over 5 years. You'll pay $547.85/month for the loan, but you'll own a car worth approximately $15,750.00 at the end. Your effective cost is just $609.52/month when you factor in the resale value.
This tool is for illustrative purposes only and does not constitute professional financial, tax, or legal advice. Calculations are estimates and may not reflect real-world variables or local regulations. Always consult with a qualified professional before making financial decisions.
Methodology and Trust
Formulas
Buy Total Cost
BuyCost = Down + (Monthly * Months) + Tax + Insurance + Maintenance - Resale
Lease Total Cost
LeaseCost = Down + (Monthly * Months) + Tax + Insurance + Maintenance + Fees
Savings
Savings = |BuyCost - LeaseCost|
Recommended Next Steps
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Lease vs. Buy: The Definitive Financial Guide
Key Insights & Concepts
The decision to lease or buy is often framed as "renters vs. owners," but the financial reality is more nuanced. It is fundamentally a choice between paying for depreciation (leasing) versus paying for the asset (buying).
The Core Economics
Leasing: The "Usage" Model
When you lease, you only pay for the value the car loses while you drive it (plus rent/interest). If a $40,000 car will be worth $25,000 in 3 years, you pay that $15,000 difference divided by 36 months, plus the "money factor" (interest).
Constraint: You must return the asset in a specific condition with limited mileage.
Buying: The "Equity" Model
When you buy, your monthly payments are higher because you are paying for the entire car. However, once the loan is paid, your cash flow frees up completely, and you own an asset with residual value.
Benefit: Long-term ownership (7+ years) is almost always mathematically superior to serial leasing.
The Hidden Traps of Leasing
- The "Cap Cost Reduction" Myth: Never put a large down payment on a lease. If the car is totaled properly on Day 1, GAP insurance pays off the lease, but you likely lose your down payment. Ideally, put $0 down.
- Mileage Penalties: Lease mileage limits are strict. Overage fees ($0.25/mile) add up fast. Driving 15,000 miles/year on a 10,000-mile lease will cost you ~$3,750 at turn-in.
- The Disposition Fee: Almost all leases have a $300-$500 fee just to return the car, unless you lease another vehicle from the same brand.
When Buying Makes Sense
Buying is the "wealth-building" choice if you follow one rule: Drive it until the wheels fall off.
- High Mileage Drivers: If you drive 20k miles/year, leasing is prohibitively expensive due to mileage purchases. Buying allows you to amortize that usage over a longer lifespan.
- The "Free Years": The golden era of car ownership is years 5-10. The loan is paid off, insurance drops, and depreciation flattens. This is where buying beats leasing by thousands of dollars.
- Modification/Wear: If you have kids, pets, or haul gear that scuffs the interior, buying removes the stress of "excess wear and tear" charges.
The "Lease-to-Buy" Strategy: Many drivers lease first to "test" the car, then buy it at lease end. Be careful—this is often the most expensive way to buy a car, as you pay acquisition fees and higher interest rates on the used-car loan for the residual value.