Loan Buy vs Lease Car Calculator
A lease advertises a lower payment; a purchase quietly builds equity. This compares both over the years you actually keep the car — repeat leases included — and shows the true monthly cost of each path after resale value.
The honest comparison needs a horizon: over six years you sign two 36-month leases, or buy once and own the car outright for the final year. Maintenance and insurance are counted for both paths (they roughly cancel) — raise the buy-side maintenance if you keep cars past warranty. The buy path's resale value is subtracted at the end: that equity is the whole point of buying.
How it works
Buying: total outlay = down payment + every loan payment + maintenance + insurance over the horizon; true cost = outlay − your equity at the end, where equity = resale value (price × (1 − depreciation)years) minus any loan balance still owing — if you sell mid-loan, the lender is paid first. Leasing: each cycle costs monthly × term + due at signing + end fees + mileage overage, repeated across the horizon, with zero equity at the end. True monthly cost divides each true cost by the months in the horizon. Leasing usually wins the monthly-payment comparison; buying builds the equity — this page exists to show both numbers at once.
Formula & worked example
Formula: Default $35,000 car over 6 years, with the same maintenance and insurance counted on both paths: buying costs $43,480 true ($604/month) with the loan finished and $13,200 of equity in hand; two lease cycles cost $53,876 ($748/month) and leave no equity.
Worked example: Default $35,000 car over 6 years: buying costs $43,480 true ($604/month) with the loan finished; two lease cycles cost $37,676 ($523/month) and leave no equity.
When to use this
- A dealer is pushing a lease payment that looks $150 cheaper than buying, and you want the whole picture
- You replace cars every 3 years and want to know what that habit actually costs
- You are deciding whether to buy out your current lease or hand it back
- You drive predictable miles and want the overage risk priced in before you sign
How to use it, step by step
- Set the horizon honestly — how long you actually keep cars, not the lease term.
- Enter the purchase path: price, down payment, APR and loan term.
- Set depreciation from the model's resale reputation (15% is the neutral default).
- Enter the real lease quote: payment, due at signing, term, end fees.
- Add any mileage overage you realistically expect per lease.
- Read the two true-monthly-cost lines, then check the equity line before deciding.
What the inputs mean
| Input | What it is | Typical values |
|---|---|---|
| Compare over (years) | The horizon both paths share — the single most important input, because leases repeat and loans end. | 3 years flatters leasing; 6–8 years is the fair fight |
| Car price / down / APR / term | The purchase path: what you pay, how much is borrowed, and the payment it creates. | $35,000 car, 10% down, 6.5% APR, 60 months |
| Depreciation per year | How fast the bought car loses value — sets the equity you keep. | ≈15% blended; year one is usually the steepest |
| Lease payment / due at signing / fees | The lease path per cycle: monthly rent, upfront cash, disposition and end fees. | $429/month, ~$3,000 due, ~$395 disposition |
| Mileage overage | Miles beyond the allowance, charged per mile at lease end. | $0.15–$0.30 per mile; buy prepaid miles instead |
Another worked example
Same $35,000 car over just 3 years instead of 6: one lease cycle costs $18,838 in payments, signing cash and fees — $26,938 once the same three years of maintenance and insurance are added — or $748 a month, with nothing owned at the end. Buying costs $33,788 out of pocket in those 3 years; the car is worth $21,494 but $13,830 is still owed on the loan, leaving $7,664 of equity — a true cost of $26,124, or about $726 a month. Nearly a tie at 3 years: the lease's due-at-signing weighs on a single cycle, the buyer's remaining loan balance weighs on the sale. The horizons decide it, which is why this tool refuses to answer without one.
Frequently asked questions
Is it cheaper to lease or buy over six years?
On the default $35,000 car, buying wins: $43,480 true cost (after $13,200 of resale equity) = $604 a month, against $53,876 = $748 a month for two lease cycles with the same maintenance and insurance counted on both paths. The lease payment looks lower month to month, but the repeated due-at-signing, end fees and the second cycle close the gap — and the buyer also owns a $13,200 car at the end. Year 7 onward the owner drives payment-free and the gap widens further.
Why does the horizon change the answer?
A lease never ends — there is always another due-at-signing. Buying front-loads cost into the loan years, then the payment drops to zero while the car still has value. On this page's car over just 3 years the two are close — buying about $726 a month true cost vs leasing about $748 — because the buyer still owes $13,830 on the loan at sale while the single lease cycle carries a full due-at-signing. Stretch to 6 years and the loan is gone, the equity is real, and buying pulls clearly ahead. The shorter the horizon and the lower the due-at-signing, the better leasing looks.
What does mileage overage really cost?
At $0.25 a mile, driving 3,000 miles over per lease adds $750 a cycle — $1,500 across two leases. High-mileage drivers should either buy, or negotiate a higher-mileage lease up front, which is always cheaper than overage at the end.
Do I build equity in a lease?
No. Every lease payment rents the car's depreciation for that term. Occasionally a lease buyout is worth it when the market value exceeds the residual — that is a separate decision at lease end, using the same resale math shown here.
What depreciation rate should I use?
New cars commonly lose about 20% in year one and 12–15% a year after; the blended 15% default is a fair planning number. Check model-specific resale data for performance cars, EVs (faster early depreciation) and trucks (slower).
⛽ Thinking electric?
Run the same car money through the EV vs Gas Calculator — purchase premium, incentives, fuel and maintenance savings, and the break-even year.
Does leasing ever build wealth?
Not directly — no payment ever becomes equity. Leasing's financial case is cash-flow and risk: lower monthly outlay, warranty coverage throughout, and no resale hassle. If the freed-up cash is genuinely invested, leasing can come out ahead; if it is spent, buying's forced equity wins by default.
Should I compare against the same car for both paths?
Ideally, yes — leasing a more expensive car than you would buy is the classic way the comparison gets rigged. Enter the same model and trim as the purchase price, then read the dealer's actual lease offer into the lease fields.