Auto Lease vs Buy Calculator
Compare the cash cost of leasing and buying a car over the same period, including resale value and fees.
What it does
Leasing and buying pay for different things. A lease pays for the depreciation the car loses during the term, plus rent and fees. A purchase pays for the whole car, and the owner recovers part of that cost when the car is sold. Comparing the monthly payment alone hides that difference because the lease payment is almost always smaller.
This calculator puts both options on the same timeline. It runs the lease for its full term, then asks what the buyer would have spent over that same number of months. The buyer still owes the rest of the loan at that point, but owns a car worth the resale value. Adding the remaining balance and subtracting the resale value gives the cash cost of ownership for the period.
The default example is a $35,000 car with $3,000 down. The lease is $450 a month for 36 months with $800 in fees, for a total of $20,000.00. Buying uses a 6.5% loan over 60 months, which brings a $626.12 payment and a $14,055.43 balance after 36 months. With a $22,000 resale value, the buy path costs $17,595.63, so buying is cheaper by $2,404.37.
Depreciation is the number that decides most cases. If the car holds value well, buying usually wins because the owner gets that value back at sale. If the car loses value quickly, or the buyer wants a new car every three years, leasing can cost less than buying and selling repeatedly. Sales tax, registration, and insurance rules vary by state and can move the result either way.
The comparison assumes the lease ends cleanly with no mileage or wear charges, and that the resale value is realistic. It leaves out maintenance, tires, insurance differences, and any investment return on the cash. A car that needs a new set of tires at 36 months is a real cost that this model does not see.
How to use
- Enter the negotiated price of the car, before taxes and fees.
- Enter the cash you would put down on either deal.
- Add the lease payment, term, and all lease fees.
- Add the loan APR, loan term, and any buying fees.
- Enter a realistic resale value for the car at the end of the lease term.
- Read the cheaper option, then check the loan balance and resale assumption behind it.
Formula
- r
- Monthly loan rate, APR divided by 1200.
- N
- Loan term in months.
- k
- Months in the lease term, used as the comparison horizon.
- balance
- Loan principal still owed after k payments.
- resale
- Estimated value of the car at the end of the comparison period.
The lease is treated as a pure cash outflow, with no residual value for the lessee. The buy path keeps the car, so the resale value is credited back. If resale is high enough, the buy cost can be negative, which means the car was worth more than the cash spent on it. Taxes, insurance, fuel, and maintenance are excluded from both sides.
Worked example
Example: $35,000 car, 36 month lease, 60 month loan at 6.5%
Defaults: price $35,000, $3,000 down, $450 lease for 36 months, $800 lease fees, 6.5% for 60 months, $22,000 resale.
- Lease total: $3,000 + $450 x 36 + $800 = $20,000.00.
- Loan principal: $35,000 - $3,000 = $32,000. Monthly rate: 6.5 / 1200 = 0.0054167.
- Loan payment: $32,000 x 0.0054167 / (1 - 1.0054167^-60) = $626.1167, shown as $626.12.
- Balance after 36 payments: $32,000 x 1.0054167^36 - $626.1167 x (1.0054167^36 - 1) / 0.0054167 = $14,055.43.
- Buy cost: $3,000 + $626.1167 x 36 + $14,055.43 - $22,000 = $17,595.63.
- Difference: $20,000.00 - $17,595.63 = $2,404.37, so buying is cheaper.
Reference table
| Deal | Lease cost | Buy cost | Result |
|---|---|---|---|
| $30,000, $2,500 down, $400 for 36 months, 5.9% for 60 months, $19,000 resale | $17,400.00 | $14,572.41 | Buy saves $2,827.59 |
| $35,000, $3,000 down, $450 for 36 months, 6.5% for 60 months, $22,000 resale | $20,000.00 | $17,595.63 | Buy saves $2,404.37 |
| $45,000, $5,000 down, $600 for 24 months, 7% for 72 months, $34,000 resale | $19,400.00 | $15,845.84 | Buy saves $3,554.16 |
Limits
- Excludes sales tax, registration, insurance, fuel, maintenance, and tires, which can differ between the two paths.
- Assumes the lease ends with no excess mileage, wear, or early termination charges.
- Relies on the resale estimate; a car worth less at the end makes buying look worse than shown.
- Ignores the time value of money and any return the cash could earn elsewhere.
Common mistakes
- Comparing the lease payment with the loan payment instead of the total cash cost.
- Leaving the down payment out of one side of the comparison.
- Using a resale value from a best case listing rather than a realistic trade in figure.
- Forgetting that the buyer still owes a loan balance at the end of the lease term.
- Ignoring mileage limits and wear charges that arrive when the lease is returned.
Try it yourself
Quick checks. Answers sit tucked under each question.
$30,000 car, $2,500 down, $400 lease for 36 months, $500 fees, 5.9% for 60 months, $19,000 resale?
Buy saves $2,827.59. Lease total $17,400.00, buy total $14,572.41, loan payment $530.37, balance $11,978.94.
$45,000 car, $5,000 down, $600 lease for 24 months, no lease fees, 7% for 72 months, $34,000 resale?
Buy saves $3,554.16. Lease total $19,400.00, buy total $15,845.84, loan payment $681.96, balance $28,478.80.
$28,000 car, $2,000 down, $380 lease for 36 months, $300 fees, 0% for 60 months, $17,000 resale?
Buy saves $4,980.00. Lease total $15,980.00, buy total $11,000.00, loan payment $433.33, balance $10,400.00.
Questions
Is leasing or buying cheaper?
Buying usually costs less over a long holding period because the owner keeps the resale value. Leasing can win for short terms on cars that depreciate quickly.
Why does the lease cost more here?
The lease pays depreciation and rent but leaves nothing behind. The buyer pays more per month but recovers value at resale.
What is a lease residual value?
The projected value of the car at lease end, set by the lender. It drives the lease payment, but the calculator uses your own resale estimate for the buy side.
Should I include taxes?
Yes, if you want a full comparison. Tax rules differ by state and can apply to the lease payment, the purchase price, or both.
Does the down payment matter?
It lowers the payment on either path but is still cash out of pocket. The calculator counts it on both sides.
What happens if I keep the car after the loan ends?
The buy advantage grows, because the owner then drives with no payment. This comparison stops at the lease term.
Sources
- Federal Trade Commission: Financing or leasing a car
- Consumer Financial Protection Bureau: Auto loans
- Consumer Financial Protection Bureau: How lenders calculate monthly payments