Car Lease vs Buy Calculator
Compare leasing versus financing a car to see total cost, monthly payments, and break-even timelines.
Lease vs Buy Calculator
Compare long-term costs of leasing or buying a vehicle based on real payment inputs.
Calculate Car Lease vs Buy
Number of years to compare costs
Disposition fee, excess mileage, wear & tear
Typical: 40-60% of original price after 3-6 years
6-Year Cost Comparison
Lease Cost Breakdown
Purchase Cost Breakdown
Understanding Car Leasing vs Buying
Deciding whether to lease or buy a car depends on your driving habits, financial situation, and personal preferences. Leasing offers lower monthly payments and the ability to drive a new car every few years, while buying means you own the vehicle and can keep it as long as you want.
This calculator helps you compare the total costs over multiple years, accounting for lease terms, loan payments, depreciation, and resale value. The right choice depends on how long you keep vehicles and how much you drive.
Key Differences Between Leasing and Buying
💰 Monthly Payments
Lease payments are typically 30-50% lower than loan payments because you're only paying for the vehicle's depreciation during the lease term, not the entire purchase price. However, with buying, each payment builds equity that you'll recoup when you sell or trade in the vehicle.
📏 Mileage Limits
Most leases limit you to 10,000-15,000 miles per year, with fees of $0.15-$0.30 per mile over the limit. If you drive 20,000+ miles annually, these fees can add thousands to your lease cost. When you buy, there are no mileage restrictions, and high mileage only affects resale value.
🔧 Maintenance and Repairs
Leases often include maintenance packages and warranty coverage for the entire lease term. When you buy, you're responsible for all maintenance and repairs after the warranty expires (typically 3 years/36,000 miles). Major repairs on older vehicles can cost thousands per year.
🏁 End of Term
At lease end, you return the car and can lease or buy another vehicle. With buying, you can keep the car as long as you want, sell it privately for more money than trade-in value, or use it as a down payment on your next vehicle. The longer you keep a paid-off car, the more money you save.
When Leasing Makes Sense
You Drive Fewer Than 15,000 Miles Per Year
Low annual mileage means you won't face excessive wear-and-tear charges or mileage overage fees at lease end.
You Like Having the Latest Technology
Leasing every 2-3 years means you always have the newest safety features, fuel efficiency improvements, and tech upgrades.
Your Budget Prioritizes Low Monthly Payments
If you need to keep monthly expenses low and can't afford a large down payment, leasing provides access to newer vehicles with lower payments.
You Use Your Car for Business
Lease payments are often tax-deductible for business use, and leasing simplifies accounting by avoiding depreciation schedules.
When Buying Makes Sense
You Drive More Than 15,000 Miles Per Year
High mileage drivers face expensive overage fees with leases. Buying eliminates mileage restrictions and penalties.
You Keep Cars for 7+ Years
The longer you drive a paid-off car, the more money you save. After 5-7 years, buying becomes significantly cheaper than continuous leasing.
You Want Customization Freedom
Leases prohibit modifications. If you want to customize your vehicle, buying gives you complete freedom to modify as you wish.
You Value Long-Term Savings
While monthly payments are higher, buying saves thousands over time by eliminating endless payment cycles and building equity.
Hidden Costs to Consider
Lease: Wear and Tear Charges
Minor scratches, dents, or interior stains can result in $500-$2,000 in charges at lease end.
Lease: Disposition Fees
Most leases charge $300-$500 when you return the vehicle, even if it's in perfect condition.
Buy: Depreciation
New cars lose 20-30% of value in the first year and 50-60% after five years. Buy used to avoid the steepest depreciation.
Buy: Maintenance After Warranty
Budget $1,000-$2,000 annually for maintenance and repairs once the warranty expires (typically after year 3).
Frequently Asked Questions
Is it better to lease or buy a car for 6 years?
Buying is almost always cheaper over 6 years. Leasing for 6 years means two 3-year leases, with two sets of down payments, disposition fees, and potentially wear-and-tear charges. You'll spend $10,000-$20,000 more leasing and own nothing at the end. Buying means higher monthly payments initially, but you'll own a car worth $10,000-$20,000 after 6 years, and you can keep driving it payment-free to maximize savings.
What happens if I exceed my lease mileage limit?
You'll pay an overage fee of $0.15-$0.30 per mile over your limit. If you have a 36,000-mile lease (3 years at 12,000 miles/year) but drive 45,000 miles, you'll owe $1,350-$2,700 at lease end (9,000 miles × $0.15-$0.30). To avoid this, negotiate a higher mileage lease upfront or consider buying if you drive more than 15,000 miles annually.
Can I negotiate a car lease like I can a purchase?
Yes! Most people don't realize that the "capitalized cost" (the price you're leasing the car for) is negotiable just like a purchase price. Negotiate this down, along with the money factor (lease interest rate), acquisition fees, and lease-end fees. Also negotiate the residual value if possible. Getting $2,000 off the cap cost can save you $50-70/month on a 36-month lease.
Should I buy my leased car at the end of the lease?
It depends on the residual value (buyout price) compared to the car's market value. Check Kelley Blue Book or similar sites. If the market value is higher than your buyout price, buying it is a good deal—you can buy and immediately sell for a profit. If the buyout price exceeds market value, return the car instead. Also consider whether you want to keep the car long-term, as buying out and keeping it for several more years maximizes value.
What's the money factor in a lease and how does it affect my payment?
The money factor is the lease equivalent of an interest rate. To convert money factor to APR, multiply by 2,400 (e.g., 0.00125 × 2,400 = 3% APR). A lower money factor means lower monthly payments. For a $30,000 car, reducing the money factor from 0.00200 (4.8% APR) to 0.00150 (3.6% APR) can save you $15-20/month. Always ask for the money factor and compare it to current loan rates.
Does leasing or buying make more sense for electric vehicles?
Leasing can be smarter for EVs because battery technology is rapidly improving. A 300-mile range EV today might be outdated when 500-mile EVs become standard in 3-5 years, significantly reducing resale value. Leasing lets you upgrade to newer technology without being stuck with outdated tech. However, if you plan to keep the car 7+ years and the federal EV tax credit applies, buying can save money long-term since EVs have lower maintenance costs than gas cars.
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