Lease vs Buy Calculator - Compare Vehicle Costs

Lease vs Buy Calculator

Enter your vehicle details to compare the total cost of leasing versus buying. See which option saves you money over 3, 5, and 7 years.

How Lease vs Buy Works

The decision to lease or buy a vehicle depends on how long you plan to keep the car, how many miles you drive, and your financial priorities. This calculator compares all costs over multiple time horizons so you can make an informed choice.

How Buying Costs Are Calculated

When you buy, you finance the vehicle price minus your down payment. The total cost includes monthly loan payments (principal + interest), sales tax on the full purchase price, insurance, and maintenance. The net cost subtracts the estimated resale value when you eventually sell or trade in the vehicle. After the loan is paid off, your only ongoing costs are insurance and maintenance, which is why buying typically wins in the long run.

How Lease Costs Are Calculated

A lease payment is based on the vehicle's depreciation during the lease term (the difference between the capitalized cost and residual value), plus a finance charge determined by the money factor. The total lease cost includes monthly payments with sales tax, the down payment, acquisition fee, disposition fee, and any excess mileage charges. If you lease continuously, you start a new lease every 2-3 years with new payments and fees each time.

The Break-Even Point

The break-even point is when the cumulative cost of buying drops below the cumulative cost of leasing. This typically happens after you finish paying off the loan. Before that point, leasing often looks cheaper because the monthly payments are lower. After that point, buying pulls ahead quickly because you have no car payment while lease costs continue with each new lease cycle.

Typical Lease vs Buy Factors

When Leasing Makes Sense

• You want a new car every 2-3 years: If driving the latest model with current technology matters to you, leasing keeps you in new vehicles.
• You drive fewer than 12,000 miles per year: Low-mileage drivers avoid excess mileage charges and get the most value from lease terms.
• You want lower monthly payments: Lease payments are typically 30-50% less than loan payments for the same vehicle.
• Business use with tax deductions: Business owners may deduct lease payments as a business expense, which can offset the higher long-term cost.
• You dislike maintenance hassles: Leased vehicles are usually under factory warranty for the entire lease term.

When Buying Makes Sense

• You keep cars for 5+ years: The longer you drive a paid-off car, the more money you save compared to continuous leasing.
• You drive high miles: No mileage restrictions and no per-mile penalty charges.
• You want to build equity: Each payment builds ownership, and the car has resale value when you sell.
• You customize your vehicle: Aftermarket modifications, accessories, and personal touches are allowed.
• You want the lowest total cost: Over a 7-10 year period, buying almost always costs less than leasing.

Frequently Asked Questions

Is it cheaper to lease or buy a car?

Leasing typically has lower monthly payments, but buying usually costs less over the long term. If you keep a car for 5+ years after paying off the loan, buying almost always wins because you have no payments during that period. Leasing is the cheaper option if you prefer driving a new car every 2-3 years and don't want to deal with resale.

What is a money factor in a car lease?

A money factor is the lease equivalent of an interest rate, expressed as a small decimal number (like 0.00125). To convert it to an approximate annual interest rate (APR), multiply by 2,400. So a money factor of 0.00125 equals roughly 3% APR. A lower money factor means lower finance charges on your lease.

What is residual value?

Residual value is the projected worth of the vehicle at the end of the lease term, expressed as a percentage of MSRP. A higher residual value means lower monthly payments because you're financing less depreciation. Vehicles that hold their value well (like trucks and SUVs) tend to have higher residual values (55-65%), while others may be lower (45-55%).

What hidden costs come with leasing?

Common hidden lease costs include: acquisition fees ($500-$1,000) charged at the start, disposition fees ($300-$500) charged when you return the car, excess mileage charges ($0.15-$0.30 per mile over the allowance), and wear-and-tear charges for damage beyond "normal" use. Early termination fees can also be substantial if you end the lease before the term is up.

How do I calculate excess mileage charges?

Subtract your annual mileage allowance from your actual annual miles, multiply by the number of lease years, then multiply by the per-mile rate. For example, driving 15,000 miles/year with a 12,000 mile allowance on a 3-year lease: (15,000 - 12,000) x 3 x $0.20 = $1,800 in excess mileage fees.

Does this calculator store my data?

No. All calculations run entirely in your browser. No data is sent to any server, and nothing is stored.

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• Auto Loan Calculator -- calculate car loan with trade-in and down payment
• Car Lease Calculator -- calculate monthly car lease payments
• Car Depreciation Calculator -- estimate vehicle value over time
• Loan Calculator -- calculate monthly loan payments and interest
• Fuel Cost Calculator -- estimate fuel expenses for your vehicle

Privacy & Limitations

Privacy: This calculator runs entirely in your browser. No personal or financial data is transmitted or stored anywhere.

Limitations: This calculator provides estimates for comparison purposes. Actual costs vary based on specific dealer incentives, negotiated prices, trade-in values, credit scores, regional tax rules, and individual insurance rates. Always get actual quotes from dealers and lenders before making a decision.

Lease vs Buy Calculator FAQ