Lease vs Buy Calculator

Leasing pays for depreciation and finance charges over a fixed term — you return the car with no equity. Buying builds ownership; resale value offsets part of what you paid, but monthly payments are usually higher for the same vehicle.

This comparison totals lease payments vs financed purchase net of estimated resale. It does not model tax incentives, disposition fees, mileage overages, or maintenance differences. Rules vary by state and lender.

Example: if lease payments total $18,000 over three years and buying costs $22,000 in payments minus $12,000 resale, the buy path nets about $10,000 — but only if you actually sell or trade at that resale figure.

A lease payment is built from three numbers the dealer may not volunteer: capitalised cost (the negotiated price), residual value (what the car is predicted to be worth at lease end), and the money factor. Multiply the money factor by 2,400 to get the approximate equivalent APR — a money factor of 0.00250 is about 6%. You can negotiate the price and sometimes the money factor, but never the residual.

Mileage caps are where lease budgets break. Typical allowances run 10,000 to 15,000 miles a year, and overage charges of 15 to 25 cents a mile mean 5,000 extra miles costs $750 to $1,250 at turn-in. If your real annual mileage exceeds the cap, buying the extra miles upfront is usually cheaper than paying the penalty.

The resale figure decides this comparison, and it is the number you are least sure of. Depreciation is steepest in the first two or three years, so a buy scenario that assumes a generous trade-in value can flip to the lease side if the market softens. Check recent private-party and trade-in values for the same model and mileage before trusting the result.

The comparison also leaves out costs that fall differently on each path. Leases add acquisition and disposition fees, often require higher liability limits, and charge for wear beyond the contract's definition; ownership carries maintenance and repairs after the warranty ends but no monthly payment once the loan is retired.

Sales tax treatment varies by state in ways that change the answer materially: some states tax the full vehicle price on a lease, others tax only the monthly payments, and a few give credit for trade-in value on one path but not the other. Check your own state's rule and CFPB lease-versus-buy guidance before committing.

Leasing can work if you prefer a new car every few years and stay within mileage caps. Buying is often cheaper long-term if you keep the car past loan payoff.

Consult CFPB lease-vs-buy guidance and verify how your state taxes each option.