Lease vs Buy a Car Calculator

What the lease vs buy a car calculator does

A lease advertises a low monthly payment, while a loan promises that the car is yours at the end, which makes the two hard to compare. This calculator puts both on the same footing: the total amount you pay over the period you use the car.

You enter the price of the car, the monthly lease payment and lease term, the loan interest rate and term, and the resale value you expect the car to hold at the end. The tool returns the total cost of leasing, the net cost of buying after you sell the car, and the difference between them.

How the comparison works

The total cost of leasing is the monthly lease payment multiplied by the number of months in the lease. At the end you hand the car back and own nothing, so there is no resale value to offset the cost.

For buying, the calculator first works out the monthly loan repayment by amortising the car price over the loan term at your interest rate, with interest charged on the remaining balance each month. Multiplying the monthly repayment by the number of loan months gives the total you pay the lender, including interest.

You own the car once the loan is repaid, so the calculator subtracts the resale value from the total loan cost to give the net cost of buying. That is the figure to compare with leasing, because a buyer keeps an asset and a lessee does not.

The difference is the total lease cost minus the net cost of buying. A negative difference means buying works out cheaper over the period; a positive one means leasing is cheaper. The bar chart shows the two totals side by side.

Why resale value matters most

The resale value most often decides the comparison. A car that holds its value well makes buying more attractive, because much of the money you spent comes back when you sell. A car that depreciates heavily narrows the gap.

A low lease payment can therefore mislead. Leasing effectively charges you for the depreciation during the lease plus a finance charge. If you buy a car that barely depreciates, you pay for the same depreciation but keep the residual value, which can make ownership cheaper despite the higher monthly outlay. Change the resale value in the calculator and see how quickly the cheaper option can switch.

Reading your results

The total lease cost is the full amount you would pay across the lease term. The net cost to buy is the total loan repayment minus the resale value. The difference shows which is cheaper and by how much over the period you modelled.

This is a financing comparison, not a full cost of ownership. Leases often cap your annual mileage and charge penalties for excess, and may require you to return the car in good condition or pay for wear. Ownership gives you unlimited mileage and freedom to modify or sell when you like, but you carry the full risk of an unexpected drop in the car's value.

Using real quotes

Enter a dealer's advertised lease payment and term, then a loan quote for the same car with its price, rate, and term. Estimate the resale value from used-car listings for that model at the age it will be when the loan ends. The result shows which offer costs less.

Then test how sensitive the answer is. A higher loan rate pushes you toward leasing; a lower resale value models a car that depreciates fast; a shorter or longer lease term shows how commitment length affects the total.

Beyond cost

Leasing suits people who want a new car every few years, predictable payments, and no worry about resale. Buying suits people who keep cars for a long time, drive high mileage, or want to build equity in an asset instead of paying for the use of one. Settle the financial question with the calculator, then weigh these lifestyle factors.

About This Lease vs Buy Car Calculator

Use this lease vs buy car calculator to get an instant estimate based on the figures you enter. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.