This lease vs buy calculator compares the net cost of leasing a car and buying it with a loan over the number of months you choose. Enter the price, the lease terms and the loan terms, and the result updates at once. Nothing you type is stored or sent anywhere.
How this lease vs buy calculator works
Lease. The monthly payment equals depreciation plus a rent charge. Depreciation is the adjusted capitalized cost (price minus your down payment) minus the residual value, divided by the term. The rent charge is the adjusted capitalized cost plus the residual, multiplied by the money factor, which is the APR divided by 2,400. Sales tax is then added to the payment. Fees and the down payment are added to the cash you pay, and the calculator assumes you lease again on the same terms until the horizon ends.
Buy. The loan amount is the price plus sales tax and fees, minus your down payment. The payment is the standard loan formula. At the end of the horizon you sell the car for the resale value you enter and pay off any remaining loan balance. The net cost is cash paid plus the loan still owed minus the resale value.
Example: a $35,000 car over 72 months
The default numbers describe a hypothetical $35,000 car. The lease has a 36-month term, a 60% residual, a 6% APR, $2,000 down, a $795 acquisition fee, a $395 disposition fee and 6% tax on payments, for a payment of $496.43. The loan has $2,000 down, a 7% APR over 60 months and 6% tax and fees added, for a payment of $695.02. Resale value is assumed to be 40% of the price after six years.
Over 72 months, leasing twice costs about $42,123. Buying costs $43,701 in cash but leaves a car worth $14,000, so the net cost is $29,701. Buying is about $12,422 cheaper in this example. If the car resells for 30% instead of 40%, buying is still about $8,922 cheaper; at 50% it is about $15,922 cheaper.
The answer changes with a shorter horizon. For 36 months, with a resale value of 60% to match a three-year-old car, leasing costs $21,062 and buying costs about $21,544, so leasing is about $483 cheaper. Run your own numbers in the lease vs buy calculator by changing the horizon and the resale value together.
What the calculator leaves out
Insurance, fuel, registration and maintenance are not included. Neither are mileage overage charges or excess wear fees on a lease, so the lease result assumes you stay within the mileage limit. Sales tax rules vary by state. The new federal deduction for car loan interest applies only to buying, not leasing, and only under specific conditions, so it is not included either. Our guide explains these points in detail.
Keep reading
The lease vs buy calculator is a starting point, not a quote. Confirm every figure with the dealer’s written lease offer or the lender’s loan estimate.
Read the full guide to lease vs buy a car for fees, taxes, mileage limits and a checklist. If you plan to finance, see how to get a car loan, and check how much car insurance you need before you sign. Your credit score affects both the loan rate and the lease money factor, and a budget shows how much of a payment you can afford.
For the federal rules on lease disclosures and consumer protection, the Consumer Financial Protection Bureau’s site at consumerfinance.gov is a good starting point.
Frequently asked questions
Is leasing or buying cheaper?
Over a long period, buying is often cheaper in total if you keep the car, as in the example above. Leasing has lower payments and can win over short horizons. The calculator shows both for your inputs.
What is a money factor?
It is the lease interest rate expressed as a small decimal. Multiply it by 2,400 to approximate the APR.
Why should I change the resale value when I change the horizon?
A car is worth more after three years than after six. Using the same percentage for both would favor buying or leasing unfairly.
Does the calculator include mileage charges?
No. It assumes you stay within the lease’s mileage limit. Excess miles are billed per mile and would add to the lease cost.
Calculators are for education only. They give estimates based on the numbers you enter, not personalized financial, tax or legal advice.