Lease vs. Buy Calculator
Leasing keeps payments low but you own nothing; buying costs more monthly but builds equity. Compare the net cost of each over the same period.
A worked example
Running this tool on current national benchmarks (Federal Reserve / Freddie Mac via FRED (St. Louis Fed)) — swap in your own numbers to see how the result moves.
- Vehicle price
- $35,000
- Down payment (to buy)
- $4,000
- Loan rate (to buy)
- 7%
- Loan term (years)
- 5
- Monthly lease payment
- $420
- Comparison period (years)
- 3
- Car value at end (% of price)
- 55%
by $5,438 after counting equity
- Buy — net cost$20,558
- Lease — total cost$15,120
- Equity if you buy$5,540
How the cheaper over 3 years changes with vehicle price
Holding the other inputs at the example above, here is how the result moves as vehicle price changes.
| Vehicle price | Cheaper over 3 years | Buy — net cost |
|---|---|---|
| $20,000 | Buying | $11,482 |
| $25,000 | Buying | $14,507 |
| $35,000 | Leasing | $20,558 |
| $55,000 | Leasing | $32,660 |
| $70,000 | Leasing | $41,737 |
The math behind it
For buying, the calculator finances the price after your down payment, amortizes it, and sums the down payment plus the payments made over your comparison period. It then subtracts the equity you would hold at the end — the car's resale value (a percentage of price you set) minus the loan balance still owed — to get the net cost of buying. For leasing, it simply multiplies your monthly lease payment by the months in the period. The lower net cost wins.
Assumptions & limits
- The car's end value is an assumption you enter as a percentage of the original price; resale is inherently uncertain.
- Buying's net cost credits you the equity you keep, so it is not just the cash paid out.
- Lease cost is the monthly payment times the months compared; it excludes down payments, disposition fees, and mileage overage charges.
- Sales tax, registration, insurance, and maintenance are not modeled on either side.
- A fixed loan rate is assumed, and the comparison period can be shorter than the loan term.
Common questions
Does the calculator account for the car's resale value?
Yes — that is the key to a fair comparison. When you buy, you own an asset at the end of the period. The calculator credits you its estimated resale value (the percentage of price you set) minus any loan balance still owed, and subtracts that equity from what you paid. Leasing leaves you with nothing, so its cost is the full stream of lease payments.
When does leasing actually come out ahead?
Leasing tends to win when you keep the car only a few years, drive within the mileage limit, and value low payments and always having a newer vehicle. Buying tends to win the longer you keep the car, because you stop making payments and keep the resale equity. Adjust the comparison period and end value to see where the crossover falls for you.
What resale percentage should I enter?
Use a realistic estimate of what the car will be worth as a share of its original price at the end of your comparison period. Many mainstream vehicles retain roughly half their value after three years, but this varies widely by make, model, and mileage. A lower resale assumption makes buying look more expensive, so test a range.