Lease vs Buy Calculator
Compare the total cost of leasing vs buying to find the better deal.
This tool is for informational and educational purposes only. It is not a substitute for professional financial, medical, legal, or engineering advice. See Terms of Service.
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The lease vs buy decision is more complex than it appears because buying builds equity while leasing does not. This calculator accounts for the vehicle's residual value when owned to give you a fair comparison.
- Enter buy details. Enter the purchase price, your expected loan rate, and loan term. For the vehicle value at end of loan, use the Car Depreciation Calculator to estimate residual value at that point in time.
- Enter lease details. Enter the monthly payment and lease term. Note: this does not include the lease money factor, cap cost reduction, or acquisition fees, which add to total lease cost. For the most accurate comparison, use the total out-of-pocket cost per month.
- Read your result. Buy net cost equals total payments minus the vehicle's residual value (the equity you keep). Lease total cost is simply payments with no equity remaining. The option with lower total cost is the better financial deal.
About the Lease vs Buy Calculator
When you buy, you pay more per month but build equity. At the end of the loan, you own an asset worth thousands of dollars. When you lease, you pay for depreciation and finance charges only, then return the car. The buy net cost subtracts the residual value to compare apples to apples. Leasing often wins on monthly cash flow. Buying usually wins on total cost over a full ownership lifecycle, especially if you keep the car beyond the loan payoff. The lease advantage grows if you always want the latest model and prioritize lower payments over equity.
Frequently Asked Questions
Is it always cheaper to buy a car than lease?
Not always. When manufacturers offer heavily subsidized lease deals (low money factors and high residual values), leasing can be cheaper than buying and financing at market rates. This is especially true in slow sales environments when manufacturers need to move inventory. Compare specific deals rather than relying on general rules. Use this calculator with actual numbers from your dealer.
What are the hidden costs of leasing?
Common lease costs beyond the monthly payment: acquisition fee ($500-$1,000 upfront), cap cost reduction (down payment that reduces monthly payment but you lose if the car is totaled), disposition fee at lease end ($300-$500), excess mileage charges (typically $0.15-$0.30 per mile over the limit), and wear-and-tear charges. The monthly payment is never the full cost of a lease.
Who should consider leasing over buying?
Leasing works best for: people who want a new car every 2-3 years, those who drive under the mileage limit (typically 10,000-15,000 miles per year), business owners who can deduct the lease payment as an expense, and buyers who prioritize low monthly payments over building equity. Leasing works poorly for high-mileage drivers, people who modify their vehicles, and those who want to own the car long-term.
Can I negotiate a lease payment?
Yes. The capitalized cost (the price of the car in the lease) is negotiable just like a purchase price. Negotiating the cap cost down reduces your monthly payment directly. The money factor (interest rate equivalent) and residual value are typically set by the manufacturer's finance arm and are harder to negotiate. Focus on getting the best cap cost, then compare the resulting payment against buying at the same negotiated price.