Lease vs. Buy a Car Calculator

How does this calculator work?

The calculator compares the total net cost of buying versus leasing a vehicle over your chosen time period. For buying, it adds up the down payment, sales tax, loan payments, insurance, and maintenance — then subtracts the estimated resale value based on annual depreciation. For leasing, it totals the amount due at signing (multiplied by the number of leases needed), monthly lease payments, insurance, maintenance, and any mileage overage fees.

Key factors that tip the scale

A few variables have an outsized impact on which option wins:

• Annual mileage. This is the single biggest swing factor. If you drive more than your lease allowance, overage fees at $0.15–$0.30 per mile add up fast. Driving 18,000 miles per year on a 12,000-mile lease adds roughly $1,500–$1,800 per year in penalties alone.
• How long you keep the car. Buying becomes more attractive the longer you own the vehicle, especially once the loan is paid off and you're driving payment-free. Leasing costs stay constant because you always have a payment.
• Depreciation rate. Cars that hold their value well (like Toyota, Honda, and Subaru models) make buying more favorable since you'll recoup more at resale. Cars that depreciate quickly can make leasing the better deal.
• Interest rate vs. lease terms. A high auto loan rate can make buying more expensive than expected. Conversely, manufacturers often subsidize lease rates to move inventory, making leases artificially cheap.

When buying usually wins

Buying tends to be the better financial choice if you plan to keep the car for more than five years, drive over 15,000 miles annually, use the vehicle for business or gig work, or don't mind handling repairs yourself. Once your loan is paid off, your monthly costs drop dramatically — this is where buyers pull ahead.

When leasing usually wins

Leasing can make more sense if you drive under 12,000 miles per year, like having a new car with the latest safety and tech features every few years, want predictable monthly costs with minimal maintenance surprise, or prefer not to deal with selling a used car down the road.

The mileage trap explained

Most leases come with a 10,000–12,000 mile annual allowance. Every mile over that limit costs $0.15–$0.30 at lease-end. This doesn't sound like much until you do the math: driving just 3,000 extra miles per year on a 3-year lease at $0.25/mile adds $2,250 to your total cost — money that turns an otherwise competitive lease into a clear loss.

Before signing a lease, honestly track your driving for a month or two. Multiply your monthly mileage by 12 and compare it to the lease allowance. If you're consistently over, buying is almost certainly cheaper.

Frequently asked questions

Is leasing throwing money away?

Not necessarily. When you buy, a large portion of your early payments goes to interest and depreciation — money you don't get back either. Leasing can be cost-effective if you stay within the mileage limits and take advantage of warranty coverage. The key is running the numbers for your specific situation rather than relying on rules of thumb.

Can I negotiate a lease?

Yes. The vehicle price (capitalized cost), money factor (the lease equivalent of an interest rate), and the residual value are all potentially negotiable. Negotiating the cap cost down has the same effect as negotiating a lower purchase price when buying. Always get quotes from multiple dealers.

What happens if I want to end a lease early?

Early lease termination usually comes with hefty fees — sometimes equal to all remaining payments. Options include transferring the lease to someone else (if your contract allows it), buying the car out of the lease, or negotiating a lease return with the dealer. None are cheap, so factor in your likelihood of keeping the car for the full term.

Should I put money down on a lease?

Generally, financial experts recommend putting as little down on a lease as possible. If the car is totaled or stolen shortly after signing, your down payment is gone — insurance pays the leasing company, not you. A lower down payment with a slightly higher monthly payment is usually the safer approach.