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Lease vs Buy Car Calculator
Use this free lease vs buy car calculator to settle the lease-or-buy question with real numbers instead of a gut feeling. Enter the lease terms and the loan terms for the same car, and it compares the total cost of each option over the same period, the monthly payments side by side, and the equity you keep when you buy — then tells you which option is cheaper and by exactly how much.
Lease
The car's expected value at the end of the lease — usually printed in the lease quote.
Charged when you return a leased car. Enter 0 if your lease has none.
Buy
| Total lease cost (36 months) | |
| Total buy cost (36 months, net of equity) | |
| Buy monthly loan payment | |
| Loan balance left after 36 months | |
| Your equity in the car (value minus balance) | |
| Cheaper option |
How it works
Leasing and buying answer the same need — a car to drive — in very different ways. A lease is a long-term rental: you pay for the car's depreciation during the lease plus interest and fees, then hand the keys back. Buying means you pay for the whole car, usually with a loan, and at the end you own something worth money. Comparing the two fairly means comparing them over the same period and counting the value the buyer keeps.
The lease side is simple: add the down payment, the monthly payments over the lease term, and the disposition fee charged when you return the car. There is no value left at the end — the car goes back to the dealer — so the total is the full cost of driving it for that period.
The buy side needs one extra step. Your monthly loan payment comes from the standard loan formula on the amount borrowed (car price minus down payment) at your APR over the loan term. Over the comparison period — the lease term — you make that many loan payments, but you also still owe a loan balance, and you own a car worth roughly its residual value. The equity is the car's value minus the loan balance left, and it is real value you keep. So the true cost of buying for the period is the cash you paid (down payment plus loan payments) minus the equity you built. That is the only fair way to compare: the lease total is money gone, while the buy total is money gone minus value kept.
Monthly payments usually tell the opposite story from total cost. Lease payments are almost always lower, because you are only paying for part of the car's value. Buy payments are higher, because you are paying the car off. That is why this calculator shows both: the monthly comparison for your budget, and the total cost for the real decision. A lower monthly payment is not the same as a cheaper car.
There are costs this calculator does not include, and they can tip a close decision. Leases charge for extra miles over the allowance and for wear beyond normal use, and you cannot modify a leased car. Buyers pay for repairs once the warranty ends, and they carry the risk that the car is worth less than expected when they sell it. Insurance can also cost more on a lease, since the leasing company sets coverage requirements. Use the calculator for the core money comparison, then weigh those extras for your own driving habits.
Worked example
A $35,000 car. Lease: $3,000 down, $450 a month for 36 months, residual value $21,000, $395 disposition fee. Buy: $5,000 down, 6% APR, 60-month loan.
Step 1: Total lease cost — $3,000 + ($450 × 36) + $395 = $3,000 + $16,200 + $395 = $19,595.00.
Step 2: Amount borrowed — $35,000 − $5,000 = $30,000.
Step 3: Buy monthly payment — $30,000 at 6% over 60 months = $579.98 a month.
Step 4: Loan payments over 36 months — $579.98 × 36 = $20,879.43.
Step 5: Loan balance after 36 months — $13,086.10 still owed.
Step 6: Equity — $21,000 value − $13,086.10 owed = $7,913.90.
Step 7: Total buy cost — $5,000 down + $20,879.43 paid − $7,913.90 equity = $17,965.53.
Buying is cheaper by $1,629.47 over 36 months ($19,595.00 lease vs $17,965.53 buy), even though the buy payment of $579.98 a month is higher than the $450 lease payment. Enter the same numbers in the calculator above and you will get exactly the same result.
FAQ
Is leasing or buying a car cheaper?
It depends on the numbers. Leasing usually has lower monthly payments, but buying is often cheaper over the same period because you keep the car's equity. Run your real quote through this calculator — the total cost over the same period, not the monthly payment, is the fair comparison.
What is the residual value on a lease?
It is the leasing company's estimate of what the car will be worth at the end of the lease, usually shown as a percentage of the price. A higher residual means lower monthly lease payments, because you pay for less depreciation. This calculator also uses it as the car's value when working out the buyer's equity.
What is a disposition fee?
A fee charged when you return a leased car, typically $300 to $500, to cover the cost of inspecting and reselling it. Some leases waive it if you lease another car from the same brand. Enter 0 here if your lease has no disposition fee.
Why is the buy cost lower if the monthly payment is higher?
Because the buyer keeps equity. Each loan payment builds ownership, and after 36 months the buyer owns a car worth more than the remaining loan balance. The lease payments are gone entirely. The calculator subtracts that equity from the buyer's cash paid to give the true cost.
What costs are not included in this comparison?
Excess mileage and wear charges on a lease, repairs after the warranty ends for a buyer, insurance differences, and maintenance. It also assumes the car is worth its residual value at the end of the period — if the real market value is lower, buying looks worse than shown here.