Lease vs Buy Auto Calculator
Compare total multi-year out-of-pocket expenses, monthly costs, and residual equity between leasing and purchasing a vehicle.
Leasing vs Buying an Automobile
Buying builds equity through debt amortization, leaving you with an asset at loan maturity. Leasing provides lower monthly payments to cover only vehicle depreciation over a fixed period.
Cost Comparison Mechanics
- Total Cost to Buy: Down Payment + (Monthly Loan Payment × Term) - Resale Equity Value
- Total Cost to Lease: Due at Signing + (Monthly Lease Payment × Term)
Worked Example
For a $38,000 vehicle comparing a 60-month purchase (with $5k down, 6.5% APR) against two consecutive 36-month leases ($2,500 down, $420/month):
- Buying Monthly Payment: ~$646.00
- Net cost to buy after retaining $16,000 in resale equity: ~$27,760
- Net cost to lease across comparable duration: ~$32,700 (with zero residual asset value).
Frequently Asked Questions
Why are monthly lease payments generally lower than loan payments?
Lease payments cover only the vehicle's anticipated depreciation and financing costs (money factor) during the lease term, rather than the entire purchase price.
What are the common restrictions on vehicle leases?
Lease agreements typically restrict annual mileage (e.g., 10,000 to 15,000 miles per year) and charge excess wear-and-tear fees upon lease return.
Do buyers have unlimited customization freedom?
Yes. Purchased vehicles can be modified, sold, or driven without mileage or wear constraints.
What is the lease money factor?
The money factor is the lease interest rate. Multiply the money factor by 2,400 to convert it to an equivalent APR percentage.
Calculate in three steps
- 1Enter your valuesUse the fields above and check the units shown beside each input.
- 2Run the calculationSelect Calculate to refresh the result with your latest values.
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