How to use Car Lease vs Buy Calculator
The lease vs buy calculator compares the true 5-year total cost of leasing against financing a vehicle purchase. It factors in all costs — payments, down payment, insurance difference, disposition fee, equity or depreciation — to show which option costs less over your chosen horizon and by how much.
- Enter the vehicle price and your down payment.
- Add loan details (APR, term) for the buy scenario.
- Add lease details (cap cost, residual, money factor, term) for the lease scenario.
- Set years to compare and annual mileage.
- Review total 5-year cost for each path and the break-even point.
Your data never leaves your device — 100% private processing.
Why leasing usually costs more long-term
Leasing has lower monthly payments but no equity at the end — you pay for depreciation without building ownership. Buying costs more monthly but creates an asset. After 5–7 years of ownership (with the loan paid off), your cost-per-mile plummets. Leasing perpetually means always having a payment; buying eventually means payment-free driving.
| Cost element | Lease (two 3-yr leases) | Buy (60-mo finance) |
|---|---|---|
| Monthly payment | ~$450–500 | ~$650–700 |
| Down payment total | ~$2,000 | ~$5,000 |
| Total payments | ~$32,400 | ~$39,000 |
| Residual / car value | $0 (returned) | ~$18,000 |
| Net 5-yr cost | ~$34,400 | ~$26,000 |
When leasing makes financial sense
Leasing can make sense when: the money factor is manufacturer-subsidised and very low; you drive under the allowed mileage; you consistently want the latest technology; you're a business owner who can deduct payments; or you dislike maintenance risk on older vehicles. Always compare the net cost (including residual equity) — not just the monthly payment.
Worked examples
$35,000 car over 5 years
Inputs: lease ~$34,400 net · buy $39k payments − $18k value
Result: Buy ≈ $26,000 net vs lease ≈ $34,400
Driving 18,000 miles/year
Inputs: lease cap 12,000 mi → 6,000 over × $0.20
Result: +$1,200/yr overage — buying usually wins
Break-even point on the purchase
Inputs: loan paid off at year 5, car worth ~$18k
Result: Payment-free driving after year 5 favours buying
Glossary
- Residual equity
- The car's market value at the end of ownership, reducing the net cost of buying.
- Disposition fee
- Fee charged at lease-end when returning a car (~$200–500).
- Total cost of ownership
- All costs over a period: payments, insurance, fuel, maintenance, depreciation.
- Break-even point
- The year when cumulative buying costs fall below cumulative leasing costs.
Related reading
Frequently Asked Questions
Why use Car Lease vs Buy Calculator?
- Compares total 5-year net cost of leasing versus financing the same vehicle side by side
- Accounts for residual equity on the purchased vehicle, which payment-only comparisons ignore
- Calculates the break-even year when cumulative buying costs dip below cumulative leasing costs
- Surfaces the annual mileage threshold beyond which leasing becomes more expensive than owning
Common use cases
- Decide whether to lease or finance a new $40,000 SUV over the next five years
- Determine if a subsidised manufacturer lease deal beats a low-APR financing offer on the same car
- Model the impact of driving 18,000 miles per year on the true cost of leasing versus owning
- Evaluate whether buying is better for a self-employed contractor who can deduct vehicle depreciation
- Compare two consecutive 3-year leases against a single 6-year loan on the same vehicle
Get weekly tool tips & updates
New tools, power-user tips, and productivity hacks — delivered free every Friday.
No spam, ever. Unsubscribe with one click.
Related Auto & Vehicle
Car Affordability Calculator
Calculate how much car you can afford based on income, debt, and down payment. Uses the 20% rule and DTI method. Free car affordability calculator.
Fuel Cost / Trip Cost Calculator
Calculate fuel cost for any trip. Enter distance, MPG, and gas price to get total fuel cost. Compare two vehicles and see annual fuel spending.
MPG / Fuel Economy Calculator
Calculate your car's MPG (miles per gallon) or L/100km fuel economy. Enter miles driven and gallons used — or convert between MPG, L/100km, and km/L.
Loan Calculator
Calculate your loan monthly payment, total interest, and payoff. Compare rates and terms instantly with this free online personal loan calculator.
Car Loan Calculator
Calculate monthly car payments, total loan cost, and interest for any auto loan. Include down payment, trade-in, taxes, and fees.
Car Lease Calculator
Calculate monthly car lease payment, total lease cost, and effective APR. Enter MSRP, cap cost, residual value, and money factor. Free lease calculator.
Explore all Auto & Vehicle.