Lease vs Buy Calculator
Lease vs Buy Calculator
When it’s time to get a new car, one of the biggest decisions you’ll face is whether to lease or buy. Leasing offers lower monthly payments and the flexibility to upgrade every few years, while buying builds long-term ownership and equity. Our Lease vs Buy Calculator helps you compare both options side by side so you can see the true costs over time and choose the option that best fits your budget and lifestyle.
How the Lease vs Buy Calculator Works
This calculator allows you to compare the financial impact of leasing versus buying. By entering key details like the vehicle price, loan terms, lease payment, and residual value, the calculator estimates:
- Monthly payment differences
- Total cost of ownership over a set period
- Equity you build by purchasing versus the flexibility of leasing
- Break-even points where one option becomes more cost-effective than the other
The tool is designed to highlight not just upfront costs, but the long-term financial implications of both options.
Benefits of Leasing a Car
Leasing can be an attractive option if you want lower monthly payments and the ability to drive a new vehicle every few years. Some of the benefits include:
- Lower Monthly Payments: Lease payments are typically less than auto loan payments.
- Newer Cars More Often: Leasing allows you to upgrade to the latest model every two to three years.
- Lower Repair Costs: Most leased cars are under warranty, minimizing out-of-pocket repair expenses.
- Tax Advantages: In some cases, leasing may offer tax deductions if the car is used for business.
However, leasing also comes with mileage limits, potential wear-and-tear fees, and no equity building.
Benefits of Buying a Car
Buying a car, whether outright or through financing, gives you long-term ownership and more freedom. Advantages include:
- Equity and Ownership: Once your loan is paid off, you own the car and can drive payment-free.
- No Mileage Limits: Unlike leases, ownership means no restrictions on how much you drive.
- Customization: Owners can modify their cars without penalty.
- Resale Value: You can sell or trade in your vehicle at any time, recapturing part of your investment.
While monthly payments are usually higher, ownership provides more financial freedom over the long run.
How to Use the Calculator
To compare leasing and buying:
- Enter Lease Details: Monthly payment, lease term, and residual value (the car’s value at lease end).
- Enter Purchase Details: Car price, loan term, interest rate, and down payment.
- Compare Results: The calculator will display monthly costs, total cost over the term, and equity value for buying.
- Decide Based on Your Lifestyle: Use the results to determine whether flexibility (leasing) or ownership (buying) makes more sense for you.
Example: If you lease a car for $300/month for 36 months, you’ll spend $10,800 and return the car with no ownership. If you buy the same car with a $450/month loan over 60 months, you’ll spend more monthly, but after 5 years, you’ll own an asset worth thousands.
Frequently asked questions
Is leasing cheaper than buying in the long run?
Leasing usually costs less month-to-month but offers no ownership at the end. Buying often has higher payments initially but is more cost-effective in the long run since you eventually own the car.
What happens if I go over the mileage limit on a lease?
Most leases charge a per-mile fee if you exceed the mileage cap, which can add up quickly. If you drive a lot, buying might be the better choice.
Can I buy the car after my lease ends?
Yes. Many leases include a buyout option that lets you purchase the car at the residual value. This can be a good option if the car is worth more than the buyout price at lease end.