Car Lease vs. Buy Calculator
Compare the true total cost of leasing vs. buying a vehicle over any time period
LEASE
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BUY
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Lease Monthly
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incl. tax
Buy Monthly
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loan payment
Monthly Difference
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Lease Net Cost
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total out-of-pocket
Buy Net Cost
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total paid − resale value
Better Option
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over the lease term
Cost Breakdown Comparison
Lease Costs
Buy Costs
Cumulative Net Cost Over Time
Lease
Buy (net of vehicle value)
Lease vs. Buy: What's Really Cheaper?
Leasing typically offers lower monthly payments than buying, but you don't build equity and must return the car at the end. Buying costs more per month initially, but the payments stop once the loan is paid off and you own an asset with resale value. The right answer depends on how you use your car, how long you keep vehicles, and what you value.
Leasing makes sense if: you want a new car every 2–3 years, drive under the mileage limit, want lower monthly payments, and don't mind never owning the car. Buying makes sense if: you keep cars long-term, drive many miles, want to build equity, or frequently modify your vehicle.
Frequently Asked Questions
- What is the money factor in a lease?The money factor is the lease equivalent of an interest rate. Multiply it by 2,400 to get the approximate APR. A money factor of 0.00125 equals about 3% APR. Always ask the dealer for the money factor and compare it to financing rates.
- What happens if I exceed my mileage limit on a lease?Excess mileage charges typically run $0.15–$0.30 per mile over the limit. If you drive 3,000 miles over a 36-month lease at $0.20/mile, that's a $600 charge at turn-in. This calculator lets you input your expected annual mileage to factor in those costs.
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Is it ever better to lease than buy?Leasing makes sense if you: prefer always driving a new car, drive under the mileage limit (typically 10,000–15,000 miles/year), can deduct the lease as a business expense, or want lower monthly payments without a large down payment. Buying is usually better long-term since you build equity and have no mileage restrictions. Leasing costs more over a decade but can be the right choice in specific circumstances.
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What does residual value mean in a car lease?Residual value is the estimated worth of the vehicle at the end of the lease term, expressed as a percentage of MSRP. A higher residual value means lower monthly payments because you're financing less depreciation. Vehicles with strong resale values (many Toyotas, Hondas, trucks) tend to have higher residuals and are generally cheaper to lease. Residual value is set by the lender, not the dealer.