Car Lease vs Buy Calculator

To use this lease versus buy calculator, follow these steps:

1. Enter the vehicle price (MSRP) of the car you are considering. This is the manufacturer suggested retail price, not a discounted dealer price.
2. Enter your down payment for the purchase option. A typical down payment is 10 to 20 percent of the vehicle price.
3. Enter the auto loan interest rate (APR) you expect to qualify for. Check current rates from your bank, credit union, or online lenders. A good credit score typically qualifies for 4 to 7 percent.
4. Set the loan term using the slider. Most loans are 36 to 84 months. Longer terms lower your monthly payment but increase total interest.
5. Enter the monthly lease payment you would pay for leasing the same vehicle. Contact a dealership or check the lease listings for comparable vehicles to estimate this amount.
6. Set the lease term using the slider. Most leases are 24, 36, or 48 months.
7. Enter the lease down payment, which is the cash due at signing. This typically includes the first month payment, registration, documentation fees, and acquisition fees.
8. Estimate the resale value as a percentage of the original price. Enter 45 percent as a default estimate, but adjust based on the vehicle brand (luxury cars depreciate faster; some brands hold value better).
9. Enter your annual mileage if you want to factor in lease mileage penalties. Leave at the default if mileage is not a concern.

The calculator instantly compares the total cost of each option and provides a clear recommendation. You can adjust any input to see how changes affect the outcome. For example, try reducing the lease term from 36 to 24 months or increasing your down payment to see the impact.

A car lease versus buy calculator is a financial planning tool that compares the total cost of leasing a vehicle with the total cost of purchasing one. It accounts for down payments, monthly payments, loan interest, vehicle depreciation, and residual value to help you determine which option is more affordable for your situation.

The lease versus buy decision is one of the most important transportation finance choices you will make. Leasing appeals to drivers who want a new car every few years, prefer predictable monthly costs with warranty coverage, and drive fewer miles annually. Buying appeals to those who drive high mileage, keep cars long-term, want unlimited customization, and prefer to build equity rather than pay for vehicle depreciation.

Beyond the monthly payment, the comparison must account for several cost factors that distinguish leasing from buying. Leases include mileage limits (typically 10,000 to 15,000 miles per year) and charge overage fees of $0.15 to $0.30 per excess mile, making them unsuitable for high-mileage drivers. Leases also mandate comprehensive and collision insurance coverage with low deductibles, increasing your insurance costs. Wear and tear charges at lease end add unpredictability to the final cost. On the buying side, you must consider depreciation (typically 40 to 60 percent over five years), maintenance and repair costs that accelerate as the vehicle ages, and the risk of mechanical failure after warranty expiration. However, buyers who keep vehicles long-term and drive high mileage eventually achieve a much lower cost per mile than leasing.

The break-even analysis depends heavily on your expected mileage and how long you plan to keep the vehicle. Most lease contracts assume 12,000 to 15,000 miles annually. If your actual driving exceeds this, leasing becomes expensive fast. Conversely, if you drive fewer miles and prefer the predictability and simplicity of a lease, the total cost might favor leasing even though buying is theoretically cheaper over a very long ownership timeline.

The lease versus buy comparison relies on straightforward formulas for total cost calculation:

Total Cost of Buying = Down Payment + (Monthly Loan Payment × Loan Term in Months) − Resale Value

Monthly Loan Payment (M):

M = P × [r(1 + r)n] / [(1 + r)n − 1]

Total Cost of Leasing = Lease Down Payment + (Monthly Lease Payment × Lease Term in Months)

Cost Difference = Total Lease Cost − Total Buy Cost

A positive cost difference means buying is cheaper; a negative difference means leasing is cheaper. The following table defines each variable used above:

Note on Residual Value: The residual value is the estimated market value of the vehicle at the end of the loan term. It is expressed as a percentage of the original MSRP. A vehicle with 45 percent residual value will be worth 45 percent of its original price after the loan term ends. This value reduces your net cost of buying because you can sell the vehicle and recover some of your investment.

Mileage Penalty Calculation (Optional): If you exceed lease mileage allowance, the penalty is typically calculated as: Excess Miles × Per-Mile Charge (usually $0.15 to $0.30). For example, 4,000 excess miles at $0.25 per mile equals $1,000 in additional charges.

Scenario 1 — Low-Mileage Driver Where Leasing Wins: You drive 10,000 miles annually and prefer a new car every three years. A $35,000 vehicle with a 20 percent down payment ($7,000), 6.5 percent APR on a 60-month loan, and a 45 percent residual value costs: $7,000 + ($588 × 60) − $15,750 = $22,530 net cost. For the same vehicle, a 36-month lease at $350 per month with $2,000 down at signing costs: $2,000 + ($350 × 36) = $14,600 total. Leasing saves $7,930 in this scenario. The lease includes warranty coverage, no maintenance costs, and predictable monthly expenses. Low mileage and shorter ownership timeline strongly favor leasing.

Scenario 2 — High-Mileage Driver Where Buying Wins: You drive 18,000 miles annually and plan to keep the car for seven years. The same $35,000 vehicle with 10 percent down ($3,500), 6.5 percent APR on a 60-month loan, and 45 percent residual value costs: $3,500 + ($588 × 60) − $15,750 = $19,290 net cost over five years. If you keep the car for seven years total, adding two additional years of maintenance and insurance, your total cost remains reasonable. For leasing, most lease contracts allow only 12,000 to 15,000 miles annually. Three years at 18,000 miles equals 54,000 total miles. Assuming a 12,000-mile-per-year allowance of 36,000 miles, you face 18,000 excess miles at $0.25 per mile = $4,500 in penalties. Total lease cost becomes $14,600 + $4,500 = $19,100, but this covers only three years. You would need a second lease for years four through seven, adding another $14,600 or more. Total cost of two leases exceeds $33,700 for the same seven-year period, while buying costs only $19,290. High mileage and long-term ownership heavily favor buying.

Scenario 3 — Break-Even Analysis: You drive 12,000 miles annually and are uncertain whether to keep a car three years or five years. A $30,000 vehicle with 15 percent down ($4,500), 6.5 percent APR on a 60-month loan, and 45 percent residual value costs: $4,500 + ($532 × 60) − $13,500 = $16,740 total for five years. For a three-year lease at $320 per month with $2,000 down: $2,000 + ($320 × 36) = $13,520. Leasing is cheaper by $3,220 for the first three years. However, if you decide to keep the car longer, the math shifts dramatically. The loan is paid off after five years, so years six and seven involve only insurance, fuel, and occasional maintenance (probably $1,000 to $2,000 annually). A second three-year lease would cost another $13,520, bringing total seven-year cost for leasing to $27,040. Buying costs $16,740 plus two years of minimal expenses ($3,000), totaling $19,740. Buying saves $7,300 if you change your mind and keep the vehicle longer.