Cost Calculator AI
Cars & VehiclesDecision Matrix

Car Lease vs. Buy Calculator

Compare the total financial cost of leasing versus buying a vehicle over 3 to 5 years, factoring upfront cash, monthly payments, fees, depreciation, and retained trade equity.

Lease vs. Buy Specifications

Lease Option
Purchase Option
Financial Comparison
Net Cost Verdict
$90.00

Recommendation: Costs are similar over 36 months.

Total Lease Outlay$18,710.00
Net Buy Cost (after resale equity)$18,800.00
Retained Buy Equity at Exit$7,800.00

Net Cost of Ownership Comparison Formula

Net Buy Cost = Total Buy Cash Outflows โˆ’ (Vehicle Resale Value โˆ’ Remaining Loan Balance)
  • Total Lease Cost = Down Payment + Acquisition Fee + (Monthly Lease Payment ร— Term) + Disposition Fee.
  • Net Buy Cost: Accounts for the fact that when you buy, you retain equity at the end of the term to sell or trade in.

Step-by-Step Worked Example

Scenario: Comparing a 36-month lease vs 60-month purchase of a $36,000 vehicle sold at month 36

Calculation Steps:

  1. Total Lease Outlay (36 mos) = $2,500 + $695 + ($420 ร— 36) + $395 = $18,710.00
  2. Buy Cash Outflow (36 mos) = $5,000 down + ($600 ร— 36) = $26,600.00
  3. Remaining Loan Balance at month 36 = $13,200
  4. Net Buy Equity at Exit = $21,000 (resale) โˆ’ $13,200 (loan balance) = $7,800.00
  5. Net Buy Cost = $26,600 โˆ’ $7,800 = $18,800.00
Result: The net costs are virtually tied ($18,710 lease vs $18,800 buy over 3 years), but buying gives you flexibility without mileage limits.

How to Use This Calculator

  1. 1Enter the vehicle price and identical ownership horizon (e.g. 36 months).
  2. 2Input the lease down payment, monthly payment, and inception/disposition fees.
  3. 3Input purchase down payment, loan APR, and estimated resale value at term end.
  4. 4Evaluate cash flow versus long-term net wealth retention.

Assumptions & Limitations

  • Assumes lease mileage limits (e.g. 10,000 or 12,000 miles/yr) are respected without excess mileage surcharges.

Frequently Asked Questions

Who should lease instead of buy?

Leasing makes sense for drivers who prefer a new car every 2 to 3 years, drive under 12,000 miles per year, want predictable warranty coverage, or can deduct lease payments as a legitimate business expense.

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