How this works
Lease vs buy is one of the most-googled car questions and it has no universally right answer — it depends on how long you keep the car, how the lease and loan are priced, and what the residual value is. The calculator gives you a single number for each path so you can see whether the math currently favours leasing or owning.
Lease side. Total cost = drive-off (down payment, fees, first month) + monthly payment × lease term. At lease end you walk away (the residual value belongs to the lessor). If you keep leasing for the same total holding period, multiply by the number of leases you'd sign.
Buy side. Total cost = down payment + total loan interest + (price − down − loan principal paid) − resale value at the end. The interest portion comes from a standard amortising-loan formula. Resale is the trickiest input — a 5-year-old mass-market car typically retains 35–45% of MSRP; a luxury or fast-depreciating model can retain less than 30%. Use the rule of thumb that cars lose ~50% in 5 years unless you have model-specific data.
General patterns: leasing tends to win at short hold periods (1–4 years) and on premium cars where lease residuals are subsidised; buying tends to win at long hold periods (6+ years) where you keep using a depreciated asset for free. The breakeven is usually 4–5 years for mainstream cars at typical pricing.
The formula
years_held lets you compare options over the same window — a 3-year lease compared against keeping a bought car for 8 years would underweight buying without it. Resale value is the biggest swing factor; use sites like Edmunds or Auto Trader for a model-specific 5-year resale estimate.
Example calculation
- Lease: $399/month × 36 months + $2,500 drive-off, 6 years held → 2 leases.
- Lease total ≈ $33,728. Buy: $35K price, $5K down, 5-yr loan at 6%, sold for $14K after 6 years → buy total ≈ $30,750. Buy is $2,978 cheaper here.
Frequently asked questions
What's not included in this comparison?
Insurance (often higher on leases due to required gap coverage), maintenance (similar in years 1–3, much higher on a buy in years 6+), end-of-lease wear-and-tear and over-mileage charges (can be $500–$3,000+), and the opportunity cost of capital tied up in a buy. For a luxury or high-mileage driver, leasing's extra fees can flip the result; for a 10K-mile-per-year buyer, buying tends to look better than the headline math suggests.
When does leasing always make sense?
When (a) you can deduct the lease as a business expense at full or higher rate than depreciation, (b) the manufacturer is offering a subvented residual that's above the realistic resale value (common on luxury models with weak demand), or (c) you genuinely change cars every 2–3 years and would otherwise eat the depreciation curve's steepest section twice. For most consumers swapping every 5+ years, leasing is rarely the optimal choice.
How do I estimate resale value?
Search a recent sold-listing on a service like Edmunds, KBB, or AutoTrader for the same model and trim, ~5 years old, with average mileage. Adjust by ~10% per 20K miles above or below average. For new models without 5-year history, use the segment average: economy 35–45%, mainstream 35–50%, luxury 25–40% (luxury depreciates fastest), trucks 50–60% (the resale champions in the US).