Car Lease vs Buy Calculator
Compare the total cost of leasing vs financing a car over your ownership horizon, including resale value and equity.
A car lease vs buy calculator compares the total cost of leasing a vehicle against buying the same vehicle over an identical period, so the two options can be judged on one number each. The comparison is easy to get wrong by instinct: a lease's lower monthly payment looks cheaper, but a buyer ends the period owning an asset whose resale value offsets a large share of what they spent, while a lessee returns the car and keeps nothing. Whether that ownership offset outweighs the lease's lower payments depends on your specific numbers — which is exactly what this tool computes.
Enter the vehicle price, your lease quote, your loan terms, and how long you intend to keep the car. The calculator reports the total cost of each path over that horizon, the difference between them, and the equity the buyer holds at the end.
How it's calculated
Each path is summed over your ownership horizon:
Lease total = down payment + (monthly payment × months) + lease-end fees + opportunity cost of the down payment
Buy total = down payment + loan payments made + remaining loan balance − resale value + opportunity cost of the down payment
The loan payment uses the standard annuity formula
Payment = P · r / (1 − (1 + r)−n), and the loan is
simulated month by month to find what has been paid and what balance
remains at your horizon. Buyer equity is resale value minus any remaining
balance. To keep the comparison fair, both paths are charged the
opportunity cost of their up-front cash — the return that money could have
earned invested at your chosen rate — applied symmetrically. Full formulas
are on our methodology page; for the mechanics
of lease contracts themselves (money factor, residual value, mileage caps),
the FTC's guide to
financing or leasing a car
is the primary consumer reference.
Worked example: a $38,000 car over 6 years
Take the calculator's default scenario: a $38,000 vehicle kept for 6 years. The lease quote is $450 a month with $3,000 due at signing and $400 in lease-end fees. The purchase is financed with $5,000 down on a 5-year loan at 7% APR, the car is assumed to be worth 40% of its price ($15,200) after 6 years, and up-front cash is charged a 5% opportunity cost.
| Component | Lease | Buy (finance) |
|---|---|---|
| Up-front cash | $3,000 | $5,000 |
| Payments over horizon | $32,400 (72 × $450) | $39,206 (60 × $653.44) |
| End fees | $400 | — |
| Resale value credit | — | −$15,200 |
| Opportunity cost of up-front cash | $1,047 | $1,745 |
| Total cost over 6 years | $36,847 | $30,751 |
Buying wins this scenario by about $6,096, even though the loan payment ($653.44) is $200 a month higher than the lease — and the loan itself costs $6,206 in interest. The reason is the last year and the resale credit: the loan is paid off after 60 months, so the buyer drives year six with no payment at all, then still holds a $15,200 asset. The lessee pays $450 every month of the horizon and returns the car. The balance tips back toward leasing on short horizons: cut the horizon to 3 years and the buyer has made only 36 payments but still owes a large balance, while resale value has dropped less in percentage terms — run the scenario above to see where the crossover lands for your numbers.
When should you use this calculator?
Use it when you have real quotes in hand — a specific lease offer and a specific loan offer for the same or comparable vehicles — and want them reduced to one comparable cost each. It is also built for testing sensitivity: the resale-value percentage is the biggest single lever in the buy path, so try a pessimistic and an optimistic figure for your model's depreciation and see whether the ranking flips. The horizon input answers "how long would I need to keep it for buying to win?", and the opportunity-cost input shows how much the answer depends on what your cash could earn elsewhere. If a dealer quotes a money factor instead of an APR, multiply it by 2,400 to get the equivalent rate (see the FAQ below).
The tool compares costs; it does not weigh preferences. Wanting a new car every three years, valuing warranty coverage, or driving far more miles than a lease allows are real factors that sit outside the arithmetic.
Assumptions and limitations
- Resale value is your assumption, entered as a percentage of the original price. Actual depreciation varies widely by model, mileage, and condition, and it dominates the result.
- Excess-mileage and wear-and-tear charges are not modeled beyond the flat lease-end fee you enter. High-mileage drivers should raise that figure.
- Sales tax, registration, insurance differences, and maintenance are not modeled; leases often bundle warranty coverage years a long-term owner would eventually pay repairs beyond.
- The lease payment is taken as quoted; the tool does not decompose it into depreciation and money-factor components.
- Opportunity cost is applied to up-front cash only, not to the monthly payment differences between the paths — a deliberate simplification, documented in the methodology.
- Business-use tax treatment is excluded; IRS Publication 463 governs vehicle expense deductions (see the FAQ below).
This page is educational content about comparing vehicle costs. It is not financial or tax advice, and it does not consider your personal circumstances. For decisions that matter, consult a qualified professional.
Last reviewed: 2026-07-09