Over the same years, does leasing or buying leave you better off? Compare total cost.
How this is calculated Embed on your siteUpdated 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.
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.
| Compared over | Cost to lease | Cost to buy (after equity) | Cheaper |
|---|---|---|---|
| 3 years | $18,120 | $22,429 | Lease by $4,309 |
| 5 years | $28,200 | $23,583 | Buy by $4,617 |
$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.
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.
Over two or three years, leasing is often cheaper because new cars lose value quickly. Over five years or more, buying usually wins because the loan gets paid off and the car keeps some value.
Compare total costs over the same period, and subtract your equity if you buy: the car's value at that point minus any loan balance still owed.
You return the car and pay any fees for extra mileage or wear, buy it for the residual value in the contract, or lease a new one.
Yes. The price of the car (capitalized cost), the money factor and fees can all be negotiated, just like a purchase.
Yes, on-time lease payments are reported to credit bureaus like loan payments.
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.