Overview
Leasing and buying are two fundamentally different ways to get a car. Leasing means paying for depreciation over a set term and returning the car. Buying means paying for the entire vehicle and owning it outright when the loan is paid off.
The Auto Lease Calculator estimates your monthly lease payment based on price, residual value, and money factor. The Lease or Buy This Car? runs a side-by-side comparison of total costs over time to help you decide which makes more financial sense.
Key Differences
**Monthly payment:** Lease payments are typically 30-40% lower than loan payments for the same car because you only pay for depreciation, not the full price.
**Ownership:** Buying builds equity and leaves you with a paid-off asset. Leasing means you always have a payment unless you stop driving.
**Mileage:** Leases restrict annual mileage (usually 10,000-15,000 miles) with costly overage fees. Buying has no mileage restrictions.
**Maintenance:** Leased cars are usually under factory warranty for the entire term. Owned cars eventually need out-of-pocket repairs.
**Long-term cost:** Buying and keeping a car for 8-10 years is almost always cheaper than perpetual leasing.
When to Use the Auto Lease Calculator
- You want to estimate monthly lease payments before visiting a dealership - You need to compare different lease terms (24, 36, 48 months) - You want to understand how the money factor (lease interest rate) affects your payment - You are negotiating a lease and want to verify the dealer's numbers - You prefer driving a new car every 2-3 years
When to Use the Lease or Buy Calculator
- You want a direct cost comparison of leasing versus financing the same car - You want to see the breakeven point where buying becomes cheaper - You need to factor in your down payment, trade-in, and expected resale value - You are deciding between a lower monthly payment (lease) and long-term savings (buy) - You want to include opportunity cost of the money tied up in a purchase
Frequently Asked Questions
Q: Is leasing just throwing money away? A: Not necessarily. Leasing provides lower payments, warranty coverage, and the ability to drive newer, safer vehicles. It depends on your priorities.
Q: Can I buy the car at the end of a lease? A: Yes, most leases include a purchase option at the predetermined residual value. This can be a good deal if the car is worth more than the residual.
Q: How many miles per year do I need to buy instead of lease? A: If you drive more than 15,000 miles per year, buying usually makes more sense because lease mileage penalties add up quickly.
Q: What happens if I return a leased car with damage? A: You will be charged for any damage beyond normal wear and tear. Lease-end inspections can result in unexpected charges for dents, scratches, or tire wear.
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