Compare total cost of leasing vs buying a car over the lease term.
Lower-cost option
—
Total lease cost
—
Net buy cost (after resale)
—
Leasing rents the depreciation, buying owns the asset
A car loses most of its value in its first few years no matter who is driving it. The lease-versus-buy decision is really a question of who eats that depreciation and what you have left at the end. When you lease, your payments cover only the value the car loses during your term plus a finance charge, which is why the monthly number looks attractive. But at the end you hand the keys back and own nothing. When you buy, your payments are higher because you are funding the entire car, yet when the loan term ends you hold an asset you can sell or keep driving for free. This calculator settles the comparison the only way that is fair: total dollars out of pocket, with the car's resale value credited back to the buyer.
The logic is deliberately simple so you can trust it. Lease cost is the monthly payment across the term plus the lease down payment. Buy cost is the monthly payment across the same term plus the buy down payment, and then it subtracts the resale value you expect at the end, because that money comes back to you. The lower net figure wins.
Three years on a $40,000 car
Take the defaults: a 36-month term, a $450 lease payment with $3,000 down, against a $650 finance payment with $5,000 down on a car you expect to be worth $22,000 when the term ends. Watch how the resale value flips the result.
| Item | Amount |
|---|---|
| Lease: $450 x 36 + $3,000 down | $19,200 |
| Buy: $650 x 36 + $5,000 down | $28,400 |
| Less resale value at month 36 | ($22,000) |
| Net cost of buying | $6,400 |
| Buying is cheaper by | $12,800 |
On the surface the lease looks cheaper, $19,200 against $28,400 in gross outlay. But the buyer ends the term holding a $22,000 asset, so their true cost is just $6,400. The lessee spent $19,200 and owns nothing. Buying wins by $12,800 here, and the gap is entirely the equity the buyer keeps. This is why, over a full ownership cycle, buying and holding almost always beats serial leasing on pure cost.
When the math is not the whole answer
Cost is the headline, but it is not the only variable, and a few real situations tilt toward leasing despite the higher long-run price. If you replace your car every three years regardless, you are paying for depreciation either way, and a lease spares you the hassle of selling. If you use the car for business, the lease payment may be deductible in a way that changes the after-tax comparison, a question for your accountant. And a lease locks in a lower monthly payment, which matters if cash flow, not lifetime cost, is your binding constraint. Just go in clear-eyed about the costs this tool cannot capture: the acquisition fee of $500 to $1,000 at signing, the disposition fee of $350 to $500 at lease-end, and excess-mileage charges of 15 to 30 cents per mile over your allowance, which can run into thousands if you drive more than you predicted. Fold those into the lease figures before you decide.
How should I estimate the resale value to enter?
Use a real source rather than a guess, since this single input swings the whole comparison. Look up your exact make, model, and trim on Kelley Blue Book or Edmunds for a vehicle of the age and mileage you expect at the end of the term. Be slightly conservative, because private-party and trade-in values often come in below the optimistic figures, and a softer resale estimate gives you a more honest read on the cost of buying.
Does this account for the interest inside my payments?
Yes, implicitly. You enter your actual monthly payments, and a loan payment already bundles principal and interest while a lease payment already bundles depreciation and the rent charge. So the totals you see reflect the real cash you hand over, financing costs included. What the tool does not separately model is the opportunity cost of your down payments, the return that cash could have earned elsewhere, so if down payments differ a lot between the two options, mentally add a small edge to whichever ties up less of your money up front.