Lease or Buy a Car? Lease vs Buy Calculator
Should you lease or buy your next car? Compare total costs, monthly payments, and long-term value side by side to make the smartest financial decision.
How Lease vs Buy Calculator Works
Should you lease or buy a car? Buying usually costs less overall if you keep the car for years after the loan is paid off. Leasing gives lower monthly payments and a newer car more often, but you own nothing at the end and face mileage limits and wear charges. This calculator compares the real net cost of both offers.
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Lease vs Buy: Key Differences
Leasing means paying for a vehicle's depreciation over a set term, then returning it. Buying means financing the full price and owning the vehicle outright. Leasing typically has lower monthly payments but no equity at the end. Buying costs more monthly but you own an asset you can sell or trade. The right choice depends on how long you keep cars, your annual mileage, and whether you value ownership over flexibility. This calculator compares total costs over the same period to help you decide.
When Leasing Makes More Sense
Leasing works well if you prefer driving a new car every 2-3 years, drive fewer than 12,000-15,000 miles per year, want lower monthly payments, or need a vehicle for business deductions. Lease payments are typically 20-40% lower than loan payments. You avoid repair costs since the vehicle is under warranty. However, you face mileage penalties, wear-and-tear charges, and no equity. Over 10+ years, serial leasing usually costs more than buying and keeping a car.
When Buying Is the Better Deal
Buying wins if you plan to keep the car 5+ years, drive high mileage, or want to customize your vehicle. Once the loan is paid off, you have years of payment-free driving. The car retains resale value you can use toward your next purchase. Buying also avoids lease-end fees and mileage restrictions. The total cost of ownership is typically lower for buyers who keep vehicles 7-10 years compared to serial lessees over the same period.
Lease vs Finance a Car: Quick Comparison
If you are weighing lease vs finance, the main differences come down to ownership, monthly cost and the rules you agree to. This side-by-side summary follows the US Federal Trade Commission's guide to financing or leasing a car.
| Factor | Lease | Buy (finance) |
|---|---|---|
| Ownership | You return the car unless the contract lets you buy it | You own the car once the loan is paid off |
| Monthly payment | Usually lower for the same car | Usually higher |
| Mileage | Annual limit, with charges for extra miles | No mileage limit |
| Wear and damage | You pay for excess wear, damage and missing equipment | No end-of-term wear charges |
| Ending early | May carry a substantial early termination charge | You can sell the car and repay the loan |
| Best fit | Low mileage, wants a new car every few years | Keeps cars long-term or drives a lot |
To decide whether it is best to lease or buy a car for you, enter the real lease quote and loan offer from your dealer above. The calculator puts both on the same timeline, so you compare net cost rather than just the monthly payment.
Frequently Asked Questions
Is it cheaper to lease or buy a car?
Buying is usually cheaper long-term if you keep the car 5+ years. Leasing is cheaper monthly but costs more over 10+ years of serial leases.
What are typical lease mileage limits?
Most leases allow 10,000-15,000 miles per year. Excess mileage penalties range from $0.15 to $0.30 per mile.
Can I negotiate a lease?
Yes. You can negotiate the capitalized cost (price), money factor (interest rate), and residual value just like a purchase.
What happens at the end of a lease?
You return the vehicle, pay any end-of-lease fees (excess mileage, wear), or buy the car at the residual value specified in your contract.
Do I build equity with a lease?
No, lease payments only cover depreciation. You have no ownership stake unless you exercise the purchase option at lease end.
What is a money factor in leasing?
The money factor is the lease equivalent of an interest rate. Multiply by 2,400 to convert to an approximate APR.
Should I lease or buy a car if I drive a lot?
Buying is usually the better fit for high-mileage drivers. Leases set an annual mileage limit and charge for every extra mile, while a car you own has no mileage cap.
What is the difference between leasing and financing a car?
Financing means you borrow to buy the car and own it once the loan is paid off. Leasing means you pay to use the car for a set term, then return it unless your contract lets you buy it.