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Buy vs Lease Car Calculator

See whether buying with a loan or leasing works out cheaper over your term, including resale value.

How it is calculated

Buying is costed as everything you pay the lender, minus what you get back when you sell the car.

i = rate ÷ 100 ÷ 12
payment = P × i ÷ (1 − (1 + i)−n)
buy cost = payment × n − resale value
lease cost = lease payment × lease months

P is the car price in dollars, n the loan term in months and i the monthly rate; at a 0% rate the payment is simply P ÷ n. The buy cost is never shown below zero. A resale value above the price, a fractional number of months, or a zero or negative price or term gives no result. The two totals are compared as entered, so if the loan and lease terms differ (60 months against 36, say) the result compares different lengths of time; use equal terms for a fair test. There is no down payment, tax, insurance, registration, lease fee or mileage charge, so add them to the payment fields yourself.

Worked example

A $35,000 car financed at 6% over 60 months, expected to resell for $15,000, against a lease at $450 a month for 60 months. Monthly rate 0.5%, so the loan payment is about $676.65 and 60 payments total $40,598.88. Subtract the $15,000 resale: buy cost = $25,598.88. Lease cost = 450 × 60 = $27,000.00. The tool reports: Buying is cheaper by $1,401.12. The result depends strongly on the resale value you enter: with a resale of $10,000 leasing wins, by $3,598.88.

Try this example →

Common mistakes

  • Giving the loan and the lease different lengths, such as a 60-month loan against a 36-month lease. The tool does not align them, so the shorter lease looks much cheaper (here $16,200.00 instead of $27,000.00) simply because it covers fewer months.
  • Entering an optimistic resale value. The buy cost falls dollar for dollar with the resale figure, so a guess that is $3,000 too high swings the answer by $3,000.
  • Entering a resale value above the car price, or a term like 60.5 months. Both give no result; use whole months and a resale value at or below the price.
  • Leaving out the lease's up-front charges (down payment, acquisition fee) and the buyer's down payment. Neither is a field, so include them by adjusting the monthly figure or the price.
  • Entering the interest rate as a decimal. 6 means 6%; 0.06 is read as 0.06% and makes buying look far cheaper.

Sources

About this calculator

This calculator compares the total cost of financing a car with a loan against leasing it over the same term, factoring in the piece that a simple monthly-payment comparison usually misses: the resale (residual) value you get back at the end of a loan versus the fact that a lease returns nothing because you never owned the car.

With a loan, your true cost is the interest paid on the principal minus what you recover by selling or trading in the car at the end; with a lease, your cost is simply the monthly payments (based on the vehicle's depreciation over the lease term plus a lease finance charge, or 'money factor') with no equity to recover afterward, though also no resale-value risk.

Car buyers use this comparison to see which option is genuinely cheaper over their specific ownership term, since leasing often looks cheaper month-to-month but can cost more over several years once the loan's resale value is factored back in — the right answer depends heavily on how long you plan to keep the car and how well it's expected to hold its value.

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