Lease vs. Buy Calculator
Leasing has a lower monthly payment, but you hand the car back. Buying costs more per month, but you keep the equity. Compare both over the same period to see which one actually costs less.
Lease vs. buy over the lease term
How it works
The fair way to compare is over the same period — the lease term. For buying, we add up the down payment plus the loan payments you would make during that time, then subtract what the car is still worth at the end, because that value is yours to keep. For leasing, we add up the amount due at signing, the monthly payments, and the disposition fee at the end — and there is nothing left over, because the car goes back.
The residual value — what the car is worth when the lease ends — is the swing factor. A car that holds its value well makes buying look better, because you keep more equity. A car that loses value fast makes leasing look better, because the leasing company absorbs the depreciation instead of you.
The numbers do not capture everything. Leases come with mileage limits (often around 10,000–12,000 miles a year) and charges for extra miles and excess wear. Buying gives you freedom to drive as much as you like and to sell whenever you want, but you carry the depreciation risk yourself.
Frequently asked questions
What is residual value?
It is the leasing company's estimate of what the car will be worth at the end of the lease, usually expressed as a percentage of the price. A higher residual value means lower lease payments, because you are only paying for the value the car loses during the lease.
Why compare buying and leasing over the lease term?
Because the two options run on different clocks. Comparing them over the same number of months keeps it apples-to-apples: what you paid and what you still own at the end of that period.
Does leasing include insurance and maintenance?
No. You still pay for insurance (and leases usually require higher coverage limits), plus gas, tires, and routine maintenance, just as you would if you bought. Some leases include scheduled maintenance, but that is not guaranteed.
What about mileage limits on a lease?
Most leases allow around 10,000–12,000 miles a year. Go over and you pay a per-mile charge at the end, which can add up fast. If you drive a lot, buying usually works out cheaper.
Can I keep the car after the lease ends?
Usually yes — most leases let you buy the car for the residual value written into the contract, plus any purchase fees. Whether that is a good deal depends on what the car is actually worth at the time.
Is leasing always cheaper per month?
Almost always, yes — lease payments are lower because you are only paying for the car's depreciation during the term, not the whole price. But lower monthly payments do not mean lower total cost, which is what this calculator compares.
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