Car Buy vs Lease Calculator
Put the dealer’s lease quote next to a car loan and see which costs less, counting what the car is still worth when you’re done.
Used for both: the loan and the lease's residual
Buy
Loan term (months)
Lease
Lease term (months)
More options7% tax, fees, running costs
Both options
What cash tied up upfront could earn
Buying
Leasing
Lease payment
When each lease ends
≈ 6.00% APR
Refundable
Miles over the allowance cost $0.25 each.
Over 5 years, it's cheaper to
Buy
$10,297 less than leasing, counting the $15,530 the car is still worth to you.
- Buying, net after 5 yrs
- $38,483
- Leasing, after 5 yrs
- $48,780
- Buying pulls ahead
- Year 3
An estimate from the numbers you enter; real loan terms, fees and taxes vary. Not financial advice. Terms
Check the lease quoteIt implies about 6.0% APR
$613/mo on a $35,000 car with a 55% residual ($19,250) implies a money factor of 0.00250, about 6.0% APR. Compare it with the 5.5% loan APR: a much higher lease rate often means a marked-up money factor, which is negotiable.
The payment is 1.8% of the price a month. A common rule of thumb calls a lease good value at about 1% or less with little due at signing.
Assumes the price is the capitalised cost, the payment includes 7% tax, and anything due at signing beyond the first payment and the $800 acquisition fee lowers the capitalised cost. Edit the residual and fee under More options.
How it’s worked outNet cost of buying vs the prorated cost of leasing
Buying: down payment, trade-in and loan payments to date, plus maintenance, fuel and what the upfront cash could have earned, minus the car’s value less any loan still owed (value falls 15% a year).
Leasing: due at signing (including the first payment), the remaining payments, disposition fee, excess-mileage fees and the cost of a security deposit, spread per month and repeated for as long as you compare, plus the same maintenance and fuel.
Estimates only. Verify all figures with your dealer and lender before deciding.
How this works: Method,
How this works
Method
Buying adds the down payment, trade-in, loan payments (with sales tax and fees financed), maintenance, fuel and what the upfront cash could have earned, then subtracts the car’s value (falling 15% a year) less any loan still owed. Leasing takes the dealer’s quote, or prices the payment from the money factor and residual, adds the disposition fee, $0.25 per mile over the allowance and a deposit’s lost return, and spreads each lease per month for as long as you compare. The quote check works back to the money factor the payment implies and shows it as an APR (money factor × 2400).
Limits
An estimate from the numbers you enter; real loan terms, fees and taxes vary. Not financial advice.
Changes
- Added a printable buy-or-lease report with the cost chart and a year-by-year table.
- Redesigned: enter the dealer’s lease quote and see the APR it implies, with a chart of when buying pulls ahead; a lease that runs past your comparison is now prorated.
- Fixed the maths: buying now subtracts the car’s value less the loan owed; leasing counts excess-mileage and disposition fees, and a refundable deposit costs only its lost return.
- First published.
Frequently Asked Questions
What is the break-even point?
The break-even point is when the cumulative cost of buying (net of the car's resale value) equals the cumulative cost of leasing. Beyond this point, buying is usually cheaper because you stop making payments once the loan is paid off, while leasing repeats every few years. This calculator shows exactly when this happens based on your inputs.
How do I calculate the money factor?
The money factor is the lease equivalent of an interest rate. To convert to APR, multiply by 2400. For example, a money factor of 0.0025 = 6% APR. Check your lease agreement for this number, or let this calculator work out the money factor and APR your quoted payment implies.
Should I lease or buy?
Lease if you want lower monthly payments, drive within the mileage allowance, and prefer new cars every 2-3 years. Buy if you plan to keep the car 5+ years, drive a lot, or want to build equity you can later resell.
What happens at the end of a lease?
You return the car, pay a disposition fee, and pay for excess mileage (typically $0.15-0.25/mile) and wear-and-tear. You can also choose to buy the car at the residual value specified in your lease.
How does equity work?
When you buy, you build equity as you pay down the loan while the car depreciates. Equity is the depreciated market value of the car minus the loan balance still owed. When you lease, you build no equity — you only pay for depreciation during the term.
What about maintenance?
Leases often include warranty coverage for the entire term. When you buy, maintenance costs start mounting after the warranty expires. This calculator applies your annual maintenance estimate to both paths for a fair comparison.
How does mileage affect the decision?
Leases cap your annual mileage (typically 10k-15k). Every mile over the allowance costs roughly $0.15-0.25. If your expected driving exceeds the allowance, those excess-mileage fees can make leasing far more expensive — buying avoids them entirely.