Lease vs Buy Calculator
Compare car lease vs buy — total out-of-pocket, equity position at lease-end, and recommendation.
Written by Golam Rabbani, Founder & Lead Engineer
How to use this lease vs buy calculator
- In the Lease panel, enter the monthly lease payment, any drive-off / due-at-signing amount, and the lease term in months (often 36).
- In the Buy panel, enter the vehicle price, your down payment, the APR, the loan term in months, and an expected resale value at the end of the lease term.
- Press Calculate to see total lease cost, total out-of-pocket if you buy, the buyer's equity at lease-end, and a side-by-side recommendation.
- Use Copy to save the comparison or Reset to start over.
About this lease vs buy calculator
A lease-vs-buy calculator compares the total cash outlay of leasing a car versus buying it over the same horizon — typically the lease term. Lease total = drive-off + monthly lease payment × lease months. For the buy side, the tool amortizes the loan with the standard formula M = P × r(1+r)^n / ((1+r)^n − 1), simulates the first H months of the buy loan (where H is the lease term), tracks the remaining loan balance, and computes equity at lease-end = expected resale value − remaining loan balance. Buy net cost = (down + monthly P&I × payments-made-during-horizon) − equity at lease-end. Whichever has the lower out-of-pocket-after-equity is recommended.
For example: a $450/mo lease with $2,500 drive-off over 36 months = $18,700 total. The same vehicle at $32,000 with $4,000 down, 7.5% APR over 60 months has a monthly payment ≈ $642, so after 36 months you have paid $4,000 + $642 × 36 ≈ $27,112 out-of-pocket, with about $14,400 of loan principal still outstanding. If the expected resale at month 36 is $18,000, your equity is $3,600. Buy net cost ≈ $27,112 − $3,600 = $23,512 — so leasing is cheaper in this case, at the cost of having no asset at the end. The amortization formula and the buy/lease cost framework are documented by the U.S. Consumer Financial Protection Bureau at consumerfinance.gov/consumer-tools/auto-loans.
This calculator is for estimation only and is not financial advice — consult a qualified financial advisor or auto-finance specialist before signing a lease or auto loan.
FAQ
- Why does the buy side need an "expected resale" value?
- Because at the end of the lease horizon you still own the car and could sell it. That resale value, minus the remaining loan balance, is your equity — money you can either keep or roll into the next vehicle.
- What if my loan term equals the lease term?
- Then by month 36 the loan is fully paid off and remaining balance = 0, so your equity is just the expected resale value. This usually swings the recommendation toward buying.
- Are lease miles-cap penalties modelled?
- No — mileage caps and excess-mileage fees are not included. If you drive much more than the cap (typically 10k–15k miles/year in the U.S.), add the expected overage fee to the lease drive-off field.
- What about residual value and money factor?
- This tool takes the monthly lease payment as a single input. If your offer is quoted as money factor + residual value, compute the monthly yourself (or use a dedicated lease-payment calculator) and then drop the result here.
- Why are maintenance and insurance not included?
- Both are similar across lease and buy in the same vehicle, so they wash out of the comparison. If they differ materially (e.g. extended warranty on buy), add the delta to the buy side's down payment.
- Should I rely on this for a final decision?
- Use it for estimation only. Lease contracts have many fees and conditions (acquisition fee, disposition fee, wear-and-tear charges) the tool does not model. Read the lease contract carefully and consult a qualified financial advisor before signing.