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Lease vs Buy Car Calculator
Compare the costs of leasing versus buying a car over your chosen timeframe. This calculator estimates total payments, upfront costs, and monthly expenses to help you decide which option fits your budget best.
Lease vs Buy Calculator
Fill in your car lease and purchase details to see a clear comparison of long-term costs.
Understanding Lease vs Buy Car: A Complete Guide
Making smart decisions about lease vs buy car is important for your overall financial health, as transportation is typically the second-largest expense category for American households after housing. The average American spends over $10,000 annually on vehicle-related costs including payments, insurance, fuel, maintenance, and depreciation.
This Lease vs Buy Car Calculator Calculator helps you analyze vehicle-related financial decisions by computing costs, comparing scenarios, and projecting long-term expenses. Whether you are buying, leasing, or evaluating the total cost of vehicle ownership, this tool provides the data you need to make an informed choice.
Vehicle depreciation is often the largest hidden cost of car ownership. New cars typically lose 20-30% of their value in the first year and 60% or more over five years. Understanding depreciation helps you make smarter decisions about when to buy new versus used, how long to keep a vehicle, and whether leasing might be more cost-effective for your situation.
Financing decisions also significantly impact total vehicle costs. A lower interest rate, shorter loan term, or larger down payment can save thousands over the life of an auto loan. This calculator helps you compare these scenarios and find the most cost-effective approach for your budget.
How to Use This Lease vs Buy Car Calculator
- Enter your Car MSRP ($) — This value represents your car msrp
- Enter your Lease Term (months) — This value represents your lease term (months
- Enter your Money Factor (%) — This value represents your money factor
- Enter your Residual Value (%) — This value represents your residual value
- Enter your Down Payment ($) — This value represents your down payment
- Enter your Lease Fees ($) — This value represents your lease fees
- Enter your Car Purchase Price ($) — This value represents your car purchase price
- Enter your Loan Term (months) — This value represents your loan term (months
- Click Calculate — Review your results in the output section below the form. The calculator instantly computes all values based on your inputs.
- Adjust and Compare — Modify any input to see how changes affect the result. Try different scenarios to find the optimal approach for your situation.
All calculations are performed instantly in your browser. Your data is never sent to any server or stored anywhere — your financial information remains completely private.
Formula and Methodology: Lease vs. Buy Comparison Formula
Lease Cost = (Down Payment + Monthly Payment × Term + Fees) - Security Deposit Return
Buy Cost = (Down Payment + Monthly Payment × Term + Fees) - Resale Value
Where:
- Down Payment — Initial cash payment at signing (for both lease and purchase)
- Monthly Payment — Monthly lease payment or loan payment
- Term — Lease or loan duration in months
- Fees — Acquisition fee, disposition fee (lease), or origination fee (loan)
- Resale Value — Expected vehicle value when sold (buying only)
Worked Example
Leasing a $35,000 car: $2,000 down + $399/month × 36 + $595 disposition fee = $17,159. Buying the same car: $5,000 down + $625/month × 60 = $42,500. Resale after 5 years: $14,000. Net buy cost: $28,500. Leasing twice (6 years): $34,318. Buying wins by $5,818 over 6 years.
Limitations and Assumptions
Leasing typically results in lower monthly payments but higher long-term costs. Buying is usually cheaper if you keep the vehicle 5+ years beyond the loan payoff. Lease agreements include mileage limits (typically 10,000-15,000/year) with per-mile charges for excess. Consider your driving habits, desire for new vehicles, and financial goals when deciding.
Key Concepts and Definitions
Understanding the following key concepts will help you interpret your results and make better financial decisions:
- Principal — The initial amount of money involved in the calculation, whether it is a starting balance, loan amount, or investment.
- Interest Rate — The percentage charged or earned on the principal amount, typically expressed as an annual rate (APR). This rate determines how quickly your money grows or how much borrowing costs.
- Compounding — The process of earning interest on previously earned interest. More frequent compounding (daily vs. monthly vs. annually) results in higher effective returns or costs.
- Time Horizon — The length of time over which the calculation applies. Longer time horizons amplify the effects of compounding and small differences in rates.
- Present Value vs. Future Value — Present value is what money is worth today; future value is what it will be worth at a specific point in the future, accounting for growth or inflation.
These concepts form the foundation of virtually all financial calculations. Understanding how they interact helps you evaluate any financial product or decision with confidence.
Real-World Example: Putting the Lease vs Buy Car to Work
Let's compare vehicle ownership costs for a typical scenario.
Scenario: David is deciding between buying a new car and a certified pre-owned (CPO) vehicle:
New 2024 Honda Accord: $30,000 purchase price, financed at 5.9% for 60 months. Monthly payment: $579. After 5 years, estimated value: $13,500 (55% depreciation). Total cost of ownership including fuel, insurance, and maintenance: approximately $48,000.
CPO 2021 Honda Accord: $22,000 purchase price, financed at 6.5% for 48 months. Monthly payment: $522. After 4 years (at 7 years old), estimated value: $8,800 (60% of purchase). Total cost of ownership: approximately $36,500.
The CPO option saves David approximately $11,500 over the ownership period while providing essentially the same transportation utility. The new car offers the latest features and a longer warranty period, but the CPO vehicle — already past its steepest depreciation years — provides better overall value. This calculator helps quantify these trade-offs with your specific numbers.
Scenario Comparison: Lease vs. Buy: 6-Year Total Cost Comparison
Comparing total costs for a $35,000 vehicle over 6 years (two 3-year leases vs. one purchase).
| Cost Factor | Leasing (2×3yr) | Buying (6yr ownership) | Difference |
|---|---|---|---|
| Monthly Payments | $14,364 × 2 = $28,728 | $37,500 (5yr loan) | +$8,772 buying |
| Down Payments | $4,000 × 2 = $8,000 | $5,000 | -$3,000 buying |
| Fees | $1,190 (disp. fees) | $0 | -$1,190 buying |
| Residual Value | $0 | $14,000 (resale) | -$14,000 buying |
| Net Total Cost | $36,728 | $28,500 | Buying saves $8,228 |
