Vehicle Details
Lease Terms
Buy / Finance Terms
Lease Cost
Buy Cost
Cost Over Time
Year-by-Year Breakdown
| Year | Lease Total | Buy Total | Buy Equity | Buy Net Cost | Difference | Winner |
|---|
Equity Position Over Time
Cost Per Mile Comparison
| Lease | Buy |
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How to Use This Lease vs Buy Calculator
This calculator compares the true cost of leasing versus buying a car by accounting for all the expenses that most people overlook. Enter your vehicle price, financing terms for both options, insurance costs, maintenance estimates, and expected driving habits to get a comprehensive side-by-side comparison.
The calculator shows you total costs at 3, 5, and 7-year horizons, tracks equity positions over time, calculates the cost per mile for each option, and delivers a clear verdict telling you which option saves more money for your situation.
Key Factors in the Lease vs Buy Decision
The right choice between leasing and buying depends on several personal factors:
- How Long You Keep Cars: If you trade in every 2-3 years, leasing may cost less since you avoid the steepest depreciation. If you keep cars 5+ years, buying almost always wins because you eliminate monthly payments once the loan is paid off.
- Annual Mileage: High-mileage drivers (15,000+ miles/year) should usually buy. Lease mileage penalties of $0.15-$0.25 per excess mile add up quickly and can erase any monthly payment savings.
- Cash Flow vs Total Cost: Leasing offers lower monthly payments but higher total lifetime costs. Buying requires larger payments but builds equity. Consider which matters more for your financial situation.
- Maintenance and Warranty: Leased vehicles are typically under manufacturer warranty for the entire lease term, keeping maintenance costs low. Owned vehicles may need expensive repairs after the warranty expires.
- Tax Implications: In some states and for business use, lease payments may be partially tax-deductible. Consult a tax professional for your specific situation.
Understanding the True Cost of Leasing
A lease payment covers the vehicle's depreciation during the lease term plus interest (called the money factor) and fees. At lease end, you return the car with no equity. If you want to keep driving, you must start a new lease — essentially making car payments forever. Over a 7-year period, a person who leases continuously will typically spend 30-50% more than someone who buys and keeps the same vehicle.
However, leasing does have legitimate advantages: lower monthly payments, always driving a new car with the latest safety features, no resale hassle, and warranty coverage throughout the term. For some drivers, these benefits justify the higher long-term cost.
The Hidden Costs of Buying
Buying a car involves more than just loan payments. Sales tax on the full purchase price, higher insurance during the loan period, and increasing maintenance costs as the vehicle ages all factor into the true cost. Depreciation is the biggest expense — a new car typically loses 20% of its value in the first year and about 15% annually after that.
The buying advantage emerges after the loan is paid off. Once you own the car free and clear, your only costs are insurance, maintenance, and fuel. This is where buyers recoup their investment and start saving compared to lessees who continue making monthly payments.