Car Lease vs Buy Calculator
Compare the true total cost of leasing vs buying a car over your ownership period
Lease Details
Buy Details
Understanding Lease vs Buy
This calculator uses the concept of total cost of ownership — every dollar you spend (or avoid spending) over the comparison period.
Guide
How it works
The lease vs buy comparison looks at the true total cost of each option over the same time horizon. For leasing, this includes all payments, down payment, disposition fees, and potential mileage penalties. For buying, it includes all loan payments and down payment, minus the car's residual value at the end (since you own an asset).
Leasing typically has lower monthly payments and you drive a newer car, but you build no equity. Buying costs more monthly but you own the asset outright. The breakeven depends heavily on how long you keep the car and how many miles you drive.
Why does leasing often appear cheaper short-term but more expensive long-term?expand_more
Lease payments are lower because you're only paying for the car's depreciation during the lease period, not its full value. But you never build equity, and perpetual leasing means perpetual payments. After 5–7 years of ownership, a purchased car is paid off and you drive for free.
What is a residual value?expand_more
The residual value is the car's projected worth at the end of the lease term, set by the leasing company. A higher residual (e.g., 55–60%) means lower monthly payments because you're financing less depreciation. It also determines the buyout price if you want to purchase the car at lease end.
How do mileage overages affect lease cost?expand_more
Most leases allow 10,000–15,000 miles per year. Going over typically costs $0.15–$0.30 per mile. At $0.25/mile, driving 5,000 miles over a 3-year lease costs an extra $3,750 — significantly affecting the lease vs buy calculation.
Is it ever smarter to lease?expand_more
Leasing makes sense if you want a new car every 2–3 years, drive under the mileage limit, don't want maintenance worries (new car warranty), or use it for business (lease payments may be deductible). If you keep cars long-term or drive many miles, buying is almost always better financially.
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