Lease vs Buy Calculator

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Total Lease Cost

Net Buy Cost

after resale value

The Fundamental Difference: Renting Depreciation vs. Buying an Asset

Leasing is essentially paying for a car's depreciation and the right to use it during the lease term, not the full value of the vehicle, which is why lease payments are usually lower than loan payments for the same car. Buying with a loan means you're paying off the full purchase price and keeping the asset (and whatever it's worth) at the end, whether that's a paid-off car with resale value or continued use with no more payments.

Why "Net Buy Cost" Is the Fair Comparison

Comparing raw monthly payments alone favors leasing almost every time, since leases are structured around lower payments by design. The fairer comparison subtracts the car's resale or trade-in value at the end of the buy scenario from the total amount paid, since that value is money you can recover (by selling or continuing to drive the car with no payments) that a lease never gives you back.

When Leasing Tends to Make More Sense

You prefer driving a newer car every few years rather than keeping one long-term.
You drive under the mileage limits typical lease agreements impose, avoiding excess-mileage fees.
You want lower monthly payments and don't mind never building equity in the vehicle.
You use the car for business and can deduct lease payments as a business expense.

When Buying Tends to Make More Sense

You plan to keep the car for many years, well past a typical loan term, since payments stop but the car keeps running.
You drive significantly more than typical lease mileage allowances.
You want to build equity in an asset rather than pay for pure depreciation.
You want the freedom to modify the vehicle, which most leases restrict.

Frequently Asked Questions (FAQ)

1. Is it cheaper to lease or buy a car?

Leasing usually has a lower monthly payment, but buying builds equity in an asset you keep, so buying is often cheaper over a longer ownership period, while leasing can be cheaper if you replace your car every few years.

2. What happens at the end of a car lease?

You typically return the vehicle to the dealer, though most leases include an option to buy the car at a predetermined residual value if you decide you want to keep it.

3. Do I own anything at the end of a lease?

No. Unlike a car loan, lease payments do not build any equity or ownership stake in the vehicle, since you're paying only for the depreciation and use during the lease term, not the full purchase price.

Compare a loan directly with the Car Loan Calculator, or check overall affordability with the Loan Affordability Calculator.

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