Lease vs Buy Car Calculator

Updated October 2026

Leasing usually means lower payments; buying means you own something at the end. The fair way to compare them is over the same period, counting what you would own if you bought. This calculator does that: it compares the total cost of leasing with the total cost of buying over the lease term, after subtracting your equity in the car (its value minus any loan balance still owed). With the defaults, a $35,000 car costs $18,120 to lease for three years and $22,429 to buy over the same three years, so leasing is $4,309 cheaper. Stretch the comparison to five years and buying is $4,617 cheaper.

Why the time frame decides it

New cars lose value fastest in their first few years, and early loan payments go mostly to interest. That combination makes buying look expensive over a short window. After the loan is paid off, though, a bought car costs only insurance and upkeep, while a lessee starts a new lease with a new payment. The longer you keep a car, the more buying wins.

$35,000 car, 7% loan over 5 years, $420/month lease with $3,000 due at signing. At three years you would still owe $15,479 on the loan against a car worth about $18,000. For the five-year row the car is worth $18,000 with the loan paid off.

Leasing makes sense when

• You want a new car every two or three years and value the warranty coverage.
• You drive a predictable, moderate amount, typically within 10,000 to 12,000 miles a year.
• You use the car for business and the lease payment is deductible (ask your tax preparer).
• You want a lower monthly payment and accept that you won't build equity.

Buying makes sense when

• You keep cars five years or more.
• You drive a lot. Lease overage charges, often 15 to 25 cents a mile, add up quickly.
• You want freedom to modify the car or sell it whenever you like.

Costs this comparison leaves out

• Lease-end charges: disposition fees, excess wear and mileage overages.
• Sales tax: on a lease, many states tax only the payments; on a purchase, the full price.
• Repairs: a bought car out of warranty will cost more to maintain in later years.
• Gap insurance, which many leases include and loans may need.

Set your budget with the car affordability calculator, then price the loan exactly with the auto loan calculator. To see how fast a car loses value, try the car depreciation calculator.

Frequently asked questions

Buying cost = loan payments over the lease term minus your equity (car value minus remaining loan balance). Leasing cost = payments plus the amount due at signing. Illustrative estimate.