Car Lease vs Buy Calculator
Compare the full cost of a lease quote with financing the same vehicle. The result includes purchase equity, estimated resale value, lease mileage charges and the time value of each cash flow. Currency changes formatting only; it does not convert values.
Lease versus buy comparison
| Purchase amount financed | — |
|---|---|
| Purchase-loan payment | — |
| Purchase cash paid during period | — |
| Purchase-loan balance at end | — |
| Estimated vehicle value at end | — |
| Nominal buy cost after equity | — |
| Lease mileage charge | — |
| Lease cash paid during period | — |
| Nominal lease cost | — |
Should you lease or buy a car?
A lease can have a lower payment, but the payment alone is not a complete comparison. Buying creates an asset that may still have value when the comparison ends. Leasing may require cash at signing, charge for excess mileage and add a disposition fee without leaving ownership equity.
This calculator compares both choices at the same month. It shows ordinary cash paid and an opportunity-adjusted cost so a dollar paid today is not treated as identical to a dollar paid several years later.
How the lease versus buy calculation works
Purchase amount financed = vehicle price + sales tax + financed fees − cash down payment. The purchase loan is amortized monthly at the entered fixed APR. If the comparison period ends before the loan term, the remaining balance is deducted from the vehicle's estimated value to calculate equity.
Nominal buy cost = down payment + loan payments made + other ownership costs − ending equity.
Nominal lease cost = due at signing + lease payments + other lease costs + lease-end fees + excess-mile charges.
The adjusted comparison carries each cash outflow to the end of the period using the equivalent monthly return from the annual rate. Vehicle equity is measured at that same ending date. A zero alternative return makes adjusted and nominal costs equal.
Checked example
The starting example compares a 36-month lease with buying a $40,000 vehicle. Buying uses a $5,000 down payment, 7% sales tax, $1,000 of financed fees, a 6% APR loan for 60 months, a 55% retained value and $200 per month of other ownership costs. Leasing uses a $499 monthly payment, $3,000 due at signing, $150 per month of other costs, a $395 end fee and a $0.25 excess-mile charge for 2,000 excess miles per year. The alternative return is 5%.
- The purchase amount financed is $38,800 and the scheduled payment is $750.11 per month.
- After 36 months, the loan balance is $16,924.69 and the estimated vehicle value is $22,000, leaving $5,075.31 of equity.
- The lease mileage charge is $1,500 over the comparison period.
- Nominal cost is $34,128.75 to buy versus $28,259 to lease. After carrying dated cash flows to month 36 at 5%, the costs are $37,472.01 and $30,477.23 respectively, so leasing is $6,994.78 lower under these assumptions.
What to enter
Use the actual negotiated vehicle price and loan quote for buying. Enter a realistic resale percentage based on the same month at which the lease ends. For the lease, use the quoted payment after any tax included by the lessor and include only nonrefundable amounts due at signing. If the first monthly payment is included in the signing amount, avoid counting it again.
Other monthly costs are intended for differences between the two choices: maintenance, insurance, registration or service-plan costs that are not already included. Use the same treatment on both sides and do not enter a common cost twice.
Important limits
This is an educational scenario, not a lender or dealer quote. It assumes a fixed-rate, fully amortizing purchase loan and a lease quote that remains valid for the full comparison period. It does not predict actual resale value, damage charges, acquisition incentives, trade-in tax credits, negative trade equity, early termination, lease buyout, refundable deposits, tax rules, insurance changes, repairs, fuel, charging, parking or licensing rules. Sales-tax treatment varies by jurisdiction, especially for leases; use after-tax quoted lease payments where appropriate.
The comparison term is limited to 12–84 whole months, the loan term to 1–96 whole months, APR and sales tax to 0–30%, retained value to 0–100%, and the alternative return to −99–50%. Monetary inputs are capped to protect the calculation.
Related calculators
Use the Car Lease Calculator to build a lease payment from MSRP, residual value and money factor. Use the Auto Loan Calculator for purchase tax, trade-in and amortization details, the Car Depreciation Calculator to estimate resale value, or the Lease Buyout Calculator when deciding whether to purchase a vehicle already under lease.