Lease vs Buy Calculator

How Lease vs Buy Actually Compares

A proper comparison is not lease payments versus loan payments. It is the total outlay over the same time horizon, with the buyer's residual value — the car they still own at the end — subtracted from the buyer side. The lease comparison is straightforward: total payments equal monthly times months. The buy comparison requires subtracting what the car is worth at the lease-equivalent end date.

Why Residual Value Is the Deciding Factor

Cars typically hold 40-60 percent of their value after three years, which is the most common lease length. That residual value is the hidden advantage of buying. A 35,000 dollar car sold for 17,500 at the end of three years returns that 17,500 to the owner, which dramatically reduces the net cost of ownership. Leasing hands the residual value back to the leasing company, which is why lease payments can look attractive month-to-month but cost more in total.

Common Things People Overlook

Four factors distort the simple math. First, lease mileage caps — exceeding the allowance charges 15-30 cents per mile, which can add thousands to a heavy-driver's lease. Second, lease-end wear and tear charges, which are unpredictable. Third, maintenance — lease cars are usually under warranty, while buying past the warranty period shifts repair risk to the owner. Fourth, depreciation assumption — luxury brands often depreciate faster than the 15 percent annual default used in general calculations.

Run it with sensible defaults

Using lease monthly payment of 400, purchase price of 35,000, auto loan rate of 6, loan term of 5, the calculation works out to $8,520.57. The defaults are meant as a starting point, not a recommendation.

The levers in this calculation

The inputs — Lease Monthly Payment, Purchase Price (Equivalent Car), Auto Loan Rate, Loan Term, and Resale Value at Lease End — do not pull with equal force. Two inputs usually tip the answer one way or the other. Identify which ones matter most by flipping each value past a round threshold and watching whether the option with the lower calculated total changes.

How the math works

This calculator computes a standard amortized loan payment for the purchase price over the chosen loan term, sums loan payments made during the lease term, subtracts estimated residual value to get the buyer's net outlay, and compares that to the lease total. The lower net outlay wins. Results are estimates for illustration purposes only and do not model tax differences, lease-end fees, or mileage overages.

Using this without guilt

The figure here isn't a verdict on whether the spending is "worth it". That judgment is yours to make. What the number does is shift the question from "can I afford this?" to "is this what I want my money doing over a decade?". Both questions matter.

What this doesn't capture

The tool prices the money; it can't weigh the enjoyment. A coffee habit, gym membership, or streaming bundle might cost what the math says but deliver value that's harder to quantify. Use the number to make the trade-off visible — the decision is yours.