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Lease vs Buy Calculator

Whether leasing or buying a car costs less over the lease term, counting what you pay and the value of the car you own at the end if you buy.

Over 36 months, leasing costs $19,200 and you hand the car back; buying costs $23,584 after counting the $6,079 of the car you'd own. Leasing comes out $4,384 cheaper.

Leasing costs over 36 months
$19,200
Buying costs, less the equity you keep
$23,584
Cheaper
Leasing
Your equity in the car if you buy
$6,079

A $40,000 car, $450 a month lease for 36 months with $3,000 due at signing, against a 60-month loan at 7% with 10% down

Value left after 3 yearsLease costBuy cost (less equity)
45%$19,200$27,584
55%$19,200$23,584
65%$19,200$19,584

How this calculator works

Leasing costs the amount due at signing plus the monthly payments. Buying costs the down payment plus the loan payments made over the same months, minus your equity at the end: the car's value (the residual) less what you still owe.

What it assumes

  • No lease excess-mileage or wear charges, and no disposition fee at turn-in.
  • The car is worth its residual value at the end of the term.
  • Sales tax and fees are left out of both.

Questions people ask

Is it cheaper to lease or buy a car?

Over a short period leasing often costs less out of pocket; over the long run buying and keeping a car for many years is usually cheaper, because payments end and you keep driving.

What is a residual value?

The car's expected value at the end of the lease, set in the contract. A higher residual means lower lease payments and, if you buy it out, a higher purchase price.

What are the hidden costs of leasing?

Excess-mileage charges (often 15 to 25 cents a mile), wear-and-tear fees, a disposition fee when you return it, and fees for ending early.

Can I buy my car at the end of the lease?

Usually, at the residual value in your contract plus fees. That can be a good deal if the car is worth more than the residual.

Related calculators

  • Auto Loan CalculatorYour monthly car payment with sales tax, fees, down payment and trade-in, and what the loan costs in interest, with a full payment schedule.
  • Car Affordability CalculatorThe car price your income supports, keeping the payment to a set share of your pay, following the 20/4/10 guideline: 20% down, four years, 10% of income.
  • Loan CalculatorThe monthly payment on any fixed-rate loan, what it costs in interest, and the full amortization schedule showing where each payment goes.

Sources

Updated by the RateHerald team. The maths is tested against worked examples; report a problem.

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