Car Lease vs Buy Calculator

Lease vs. buy comparison requires calculating the true total cost of each option over the same time horizon, not just the monthly payment. Leases feel cheaper per month because you are only paying for the portion of the vehicle’s value you consume, but buying builds equity that can be recovered at resale.

Total cost of leasing over N months:

Total Lease Cost = (Monthly Payment × N) + Down Payment + Acquisition Fee + Disposition Fee

Total cost of buying over N months:

Total Buy Cost = (Monthly Payment × N) + Down Payment + Loan Balance Still Owed − Resale Value at Month N

The term people forget, and it changes the answer

If you sell before the loan is paid off, the sale proceeds go to the lender first. Only what is left over is yours. Leaving the outstanding balance out of the comparison makes buying look enormously cheaper than it is, and an earlier version of this page did exactly that.

What resale percentage should you actually put in?

A three-year-old car is typically worth 55 to 70% of what you paid, and the sharpest single drop is in year one, some of it in the first week. Luxury marques and electric cars usually fall faster than that band; pickup trucks and a handful of Japanese models hold value better than it.

Use a real trade-in quote if you can get one, because the gap between the top and bottom of that range on a $40,000 car is $6,000, which is larger than most of the differences this calculator is trying to resolve. If you cannot, 60% for three years is the honest middle.

Key definitions:

• Residual value is the lease-end value the manufacturer predicts for the vehicle
• Money factor (MF) is the lease equivalent of an interest rate, where APR ≈ MF × 2,400
• Disposition fee is charged at lease end if you do not buy or renegotiate, typically $300–$500
• Mileage overage is charged per mile over the annual limit, typically $0.15–$0.25/mile

Worked example, 36 months at 12,000 miles/year: Vehicle: $35,000 MSRP

Lease:

• Monthly $399, due at signing $2,500, acquisition fee $700, disposition fee $400
• Total: ($399 × 36) + $2,500 + $700 + $400 = $17,964
• At the end you hand back the keys and own nothing

Buy, on a 5-year loan at 6.5% APR, selling at month 36:

• $3,500 down on $35,000 leaves a $31,500 loan, which is $616.33/month
• 36 payments: $616.33 × 36 = $22,188
• Still owed at month 36: $13,836. The loan has 24 payments left.
• Resale at 55% of MSRP: $19,250, of which $13,836 goes straight to the lender
• Cost through month 36: $22,188 + $3,500 + $13,836 − $19,250 = $20,274

So the honest comparison is $20,274 to buy against $17,964 to lease, and leasing wins by $2,310 over this particular three years. Drop the balance term and buying appears to cost $6,438, which is the kind of error that talks someone into a five-year loan they will sell out of early.

The picture flips if you keep the car. Run the same purchase to month 60 and the loan is gone, the resale is still worth something, and buying wins comfortably. That is the real lesson: buying rewards holding, and selling early is where its advantage evaporates.

Leasing makes sense when:

• You prefer driving a new vehicle every 2–3 years
• You drive fewer miles than the lease limit
• The vehicle is for business and lease payments are fully deductible

Buying makes sense when:

• You plan to own the vehicle 5+ years
• You drive more than 12,000–15,000 miles per year
• You want to build equity and eliminate monthly payments eventually