What this calculator does
This calculator gives you an apples-to-apples comparison of leasing and buying the same vehicle over the same time period. Rather than just comparing monthly payments, it adds up every dollar you spend — down payments, monthly payments, acquisition fees, disposition fees, and loan interest — and then accounts for the resale value of a purchased vehicle at the end of the period. The result is a true net cost for each path, so you can see which option actually leaves you ahead financially.
Monthly payments alone are misleading. A lease payment is almost always lower than a loan payment for the same car, but that does not mean leasing is cheaper. When you buy, you accumulate equity. When you lease, you return the car with nothing to show for it. This calculator captures that difference by subtracting the car's estimated resale value from your total buying cost before making the comparison.
How we calculate the comparison
Both options are compared over the same number of months — the lease term you enter.
Lease total cost: Lease Cost = Down Payment + (Monthly Payment x Lease Term) + Acquisition Fee + Disposition Fee
At lease end, your equity is \$0.
Buy monthly payment (standard amortization): Monthly Payment = Loan Amount x [r(1+r)^n] / [(1+r)^n - 1]
Where r = monthly interest rate (APR / 12 / 100), n = loan term in months, and Loan Amount = Vehicle Price minus Down Payment.
Buy total cost, net of resale: Total Paid = Down Payment + (Monthly Payment x months in comparison period) Net Cost = Total Paid - Estimated Resale Value
The months in the comparison period are capped at the loan term. If the loan ends before the comparison period, you stop making payments. The resale value reflects the car's worth at the end of the comparison window, which you would realize by selling or trading it in.
Effective monthly cost is the total cost divided by the number of months. This lets you compare both options on a per-month basis even when monthly payments differ.
Lease vs Buy: Key differences
Leasing typically offers a lower monthly payment for the same vehicle, but you build no equity and must return the car at the end. Acquisition and disposition fees add to your total lease cost, and mileage limits (typically 10,000 to 15,000 miles per year) can result in excess-mileage charges. Leasing makes the most sense if you prefer driving a new car every two to three years, keep your mileage moderate, and want predictable costs without worrying about long-term depreciation.
Buying means higher monthly payments, but you own the asset. The car has resale or trade-in value you can recoup when you eventually sell. There are no mileage restrictions, and you can customize the vehicle however you like. Once the loan is paid off, you have no monthly payment at all, which dramatically lowers your cost of ownership in the later years.
The break-even point depends heavily on how long you keep the car. Buyers who hold their vehicle for seven to ten years typically come out well ahead of serial leasers. The longer you keep a purchased car after it is paid off, the more the economics favor buying.
How to use
1. Enter the vehicle's MSRP in the Vehicle section at the top. 2. Fill in your lease terms: monthly payment, lease length, and down payment. These figures come directly from the dealer's lease offer sheet. 3. Fill in your loan terms: APR, loan length, and down payment. Check current auto loan rates at your bank or credit union before entering a number. 4. Enter the car's estimated resale value at the end of the lease term. Used car value guides like Kelley Blue Book or Edmunds can estimate this based on make, model, year, and projected mileage at that time. 5. Review the result at the top showing which option saves money and by how much. 6. Check the detailed breakdown to see exactly where each cost comes from. 7. Switch to Detailed mode to enter the exact acquisition fee and disposition fee from your lease quote, rather than using the default estimates.
FAQs
Q: Why is the comparison over the lease term instead of the loan term? A: Comparing options over different time periods is misleading. If you lease for 3 years and buy on a 5-year loan, the comparison would need to account for what happens in years 4 and 5 as well. This calculator normalizes both options to the same window so the comparison is direct. For a longer-horizon view, you can extend the lease term input or run the calculation again for the next cycle.
Q: What is an acquisition fee? A: An acquisition fee is charged by the leasing company at the start of the lease to cover the cost of setting up the financing. It typically ranges from \$595 to \$1,095 and is either paid upfront or rolled into the monthly payment. It is separate from the dealer's documentation fee.
Q: What is a disposition fee? A: A disposition fee is charged at the end of a lease when you return the vehicle and do not purchase it. It covers the dealer's cost of inspecting, reconditioning, and reselling the car. It typically runs \$300 to \$500. If you purchase the car or start a new lease with the same brand, this fee is often waived.
Q: Should I include taxes in the vehicle price? A: This calculator focuses on the financing comparison and excludes taxes and registration fees, since those vary significantly by state and apply to both options differently. For a more complete picture, you can add estimated taxes to the vehicle price, but the relative difference between leasing and buying typically stays similar.
Q: How do I estimate the resale value at the end of the lease? A: Look up the vehicle on Kelley Blue Book or Edmunds and use the trade-in or private party value for the car at the age and mileage it will have when the lease ends. For example, if you are comparing a 36-month lease on a 2025 model, estimate the value of a 3-year-old 2025 model with roughly 36,000 to 45,000 miles. Depreciation is steepest in the first three years, so this number has a large impact on the buying calculation.
Q: Is leasing always cheaper per month? A: Almost always, yes. Lease payments only cover the depreciation portion of the car's value plus a finance charge, whereas loan payments cover the full purchase price. The gap narrows with longer loan terms (72 to 84 months), but lease payments tend to stay lower. Lower monthly payments do not mean lower total cost once you account for the lack of equity at the end.
Q: When does buying clearly win? A: Buying wins decisively when you keep the car for several years after the loan is paid off. A car with no monthly payment and modest maintenance costs is extremely inexpensive to operate. If you tend to drive a car until it reaches 150,000 or more miles, buying almost always makes more financial sense than perpetually leasing.
Q: What happens if I put no money down on a lease? A: Set the lease down payment to \$0. Note that putting more money down on a lease (a capitalized cost reduction) lowers your monthly payment but does not reduce your total cost. You are paying more upfront instead. Most financial advisors recommend against large down payments on leases because you lose that money if the car is totaled early in the lease term.
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