Does this calculator include sales tax or registration fees?

No. Tax and registration rules vary widely by state. You can approximate a tax‑inclusive comparison by adding tax to your monthly payments and/or due‑at‑signing amounts before entering them.

How should I choose the depreciation percentage?

You can start with the lease’s quoted residual value (for example, 58% of MSRP after 36 months) to derive depreciation, or use used‑car valuation tools (like resale values for 3‑year‑old models) for your exact make, model, and expected mileage.

Can I model buying the car at the end of the lease (lease buyout)?

This calculator focuses on the lease term itself. If you plan to buy the car at lease end, you can treat the buyout price plus your lease costs as an additional scenario and compare it separately to financing the car from day one.

Does this reflect mileage overages and wear-and-tear penalties on leases?

Not directly. If you expect to exceed mileage limits or incur wear‑and‑tear charges, you can add an estimated dollar amount to the lease side (for example, add expected overage cost to Disposition fee) to get a closer comparison.

Is this calculator enough to decide how to finance my car?

It’s a great starting point for comparing cash‑flow costs, but it doesn’t capture every factor—like reliability, warranty coverage, financing promotions, or your need for flexibility. Combine these results with dealer quotes and personal preferences, and consider speaking with a financial professional if you’re unsure.

finance calculator

Lease vs Buy Car Calculator

Compare lease costs to buying a car (loan) over the lease horizon, including equity from ownership.

Results

Buy monthly payment: $566
Payments made over lease horizon: $25,381
Loan balance at lease horizon: $12,904
Estimated vehicle value: $19,250
Estimated equity: $6,346
Net cost of buying over lease horizon: $19,035
Effective monthly (buy): $529
Total lease cost: $15,500
Effective monthly (lease): $431

Overview

Leasing a car often comes with a lower monthly payment and a fresh vehicle every few years, while buying builds equity but usually costs more per month. Comparing the two is tricky because you aren’t just looking at payments—you also need to account for what the car is worth when the lease ends and what you still owe on a loan.

This lease vs buy car calculator puts both options on the same footing over the lease horizon. It estimates loan payments and equity for buying, total cost for leasing (including due at signing and disposition fees), and then converts both into effective monthly costs so you can see which path is cheaper over the period you’re comparing.

How to use this calculator

Enter the Vehicle price you would pay if you bought the car and your planned Down payment, along with the Loan APR and Loan term in months.
Enter Lease payment, Lease term in months, Due at signing (including any cap‑cost reduction and upfront fees), and the Lease disposition fee.
Estimate Depreciation over the lease term as a percentage drop from the original price based on make, model, mileage, and market conditions.
Review the buy‑side loan payment, payments made, remaining balance, estimated value, equity, net buy cost, and effective monthly, alongside total lease cost and lease effective monthly.
Adjust depreciation, APR, down payment, and lease terms to see how sensitive the comparison is to these assumptions.

Inputs explained

Vehicle price: The purchase price of the car if you buy it, before down payment. This should reflect the out‑the‑door negotiated price, not just MSRP.
Down payment (buy): The amount of cash you plan to put down when buying. A larger down payment reduces your loan amount and monthly payment, but also ties up more cash upfront.
Loan APR: The annual percentage rate on the auto loan. This includes interest and certain finance charges but does not include taxes or fees not financed in the loan.
Loan term (months): The length of the car loan in months (for example, 36, 48, 60, or 72). Longer terms reduce monthly payments but increase total interest paid.
Lease payment: The monthly lease payment quoted by the dealer, typically including base payment and, in some cases, taxes if your state taxes leases monthly.
Lease term (months): The length of the lease in months (for example, 24, 36, or 39). The calculator uses this as the comparison horizon for both lease and buy options.
Due at signing: The total amount due when you sign the lease, including cap‑cost reduction (down payment), first payment, acquisition fee, and other upfront charges.
Disposition fee: The fee charged at lease end if you turn the car in rather than buy it. Enter the amount quoted in your lease offer.
Depreciation over lease term: The expected percentage drop in the car’s value over the lease horizon. For example, 45% depreciation means the car is estimated to be worth 55% of its original price at the end of the lease term.

How it works

On the buy side, the calculator computes a standard loan payment based on Vehicle price minus Down payment, the Loan APR, and Loan term (months).

It then looks only at the Lease term horizon. Observed months = min(Loan term, Lease term). Buy payments made over the horizon = Monthly payment × Observed months + Down payment.

Using amortization, it calculates the Remaining balance on the loan after Observed months. This is how much you still owe if you were to sell or trade the car at the end of the lease term.

To approximate the car’s value at that time, it applies Depreciation over the lease term: Estimated vehicle value = Vehicle price × (1 − Depreciation%).

Estimated equity = Estimated vehicle value − Remaining balance. If equity is positive, you effectively own that value and can subtract it from your total buy cost; if it’s negative, you would be underwater by that amount.

Net buy cost over the lease horizon = Buy payments made − max(0, equity). Effective monthly (buy) = Net buy cost ÷ Lease term (months).

On the lease side, Total lease cost = Lease payment × Lease term + Due at signing + Disposition fee. Effective monthly (lease) = Lease total cost ÷ Lease term.

Comparing Effective monthly (buy) and Effective monthly (lease) shows which option is cheaper over the chosen period, before taxes and ongoing costs like insurance and maintenance.

Formula

Loan payment = Amortized payment on (Price − Down) at APR over loan term
Observed months = min(Loan term, Lease term)
Buy payments made = Payment × Observed months + Down payment
Remaining balance = Loan balance after Observed months
Estimated vehicle value at term = Price × (1 − Depreciation%)
Equity = Estimated value − Remaining balance
Net buy cost = Buy payments made − max(0, Equity)
Lease total cost = Lease payment × Lease term + Due at signing + Disposition fee
Effective monthly (buy) = Net buy cost ÷ Lease term
Effective monthly (lease) = Lease total cost ÷ Lease term

When to use it

Comparing a real lease quote against financing the same vehicle, to see whether the lower lease payment is offset by fees and the lack of equity.
Testing how a higher down payment on a loan changes the effective monthly cost versus a low‑down lease option.
Exploring depreciation assumptions for different brands—high‑resale vehicles may make buying look more attractive over the lease term.
Evaluating short‑term ownership plans where you expect to sell or trade the car around the time a typical lease would end.
Helping car shoppers understand that the “cheapest” monthly payment doesn’t always correspond to the cheapest overall cost over a given time horizon.

Tips & cautions

Include sales/use tax in your lease and loan payments if you want a tax‑inclusive comparison. Tax rules vary widely by state; this calculator keeps tax separate for clarity.
If you know the lease’s residual value and mileage limits, you can derive an implied depreciation percentage to use as your starting assumption.
Consider your likely mileage and wear‑and‑tear. High expected mileage or rough use can lead to lease penalties but has a different impact on a car you own and then sell.
If you plan to keep the car long term, this lease‑horizon comparison is only part of the picture. You may want to extend the analysis beyond the lease term to reflect years of payment‑free ownership after a loan is paid off.
Look beyond dollars: warranty coverage, maintenance perks, and flexibility (ease of changing vehicles) are also important factors that this purely financial comparison does not model.
Excludes sales tax, registration, insurance, maintenance, and fuel costs, all of which can vary by vehicle and ownership structure.
Uses a single depreciation percentage over the lease term; actual resale value depends on mileage, condition, trim, local demand, and broader used‑car market conditions.
Does not model lease buyout options, excess mileage charges, wear‑and‑tear penalties, security deposits, or incentives such as rebates and loyalty credits.
Assumes a standard fixed‑rate auto loan and fixed lease payments; does not account for balloon payments or unusual financing structures.
Focuses on a single comparison horizon (the lease term) and does not quantify the long‑term cost of keeping a purchased car far beyond that term.

Worked examples

$35k car, $5k down, 5% APR for 60 months vs $350/mo lease for 36 months, 45% depreciation

Buy side: Price = $35,000; Down = $5,000; Loan amount = $30,000; APR = 5%; Term = 60 months.
Loan payment ≈ $566/month. Over the 36‑month lease horizon, buy payments made ≈ 36 × $566 + $5,000 ≈ $25,381.
Remaining balance after 36 months ≈ $12,904.
Estimated vehicle value at 36 months with 45% depreciation: 35,000 × (1 − 0.45) = $19,250.
Equity ≈ 19,250 − 12,904 ≈ $6,346. Net buy cost ≈ 25,381 − 6,346 ≈ $19,035; Effective monthly (buy) ≈ 19,035 ÷ 36 ≈ $529.
Lease side: Lease payment = $350; term = 36; Due at signing ≈ $2,500; Disposition fee = $400.
Lease total cost ≈ (36 × 350) + 2,500 + 400 ≈ $15,500; Effective monthly (lease) ≈ 15,500 ÷ 36 ≈ $431.
Interpretation: over 36 months, leasing is cheaper on a pure cash‑flow basis, but buying leaves you with equity and a path to payment‑free ownership if you keep the car longer.

Higher-resale brand improving the buy case

Increase residual strength by lowering Depreciation over 36 months from 45% to, say, 35%.
Re‑run the calculation: the Estimated vehicle value at term is higher, boosting equity.
Net buy cost and Effective monthly (buy) drop, sometimes enough to close much of the gap with leasing or even make buying cheaper.

Deep dive

Compare leasing a car versus buying it with a loan over the same time horizon by factoring in monthly payments, due‑at‑signing and disposition fees, and estimated equity from owning. Instead of just asking “which payment is lower?”, this tool reframes the decision as “how many dollars do I really lay out over the lease period, and how much value do I have to show for it at the end?”.

This lease vs buy calculator highlights effective monthly costs for each path so you can see past headline payments and make a more informed decision about how to finance your next vehicle. On the buy side it tracks loan payments and remaining balance, then subtracts any estimated equity you keep in the car; on the lease side it tallies every dollar you commit over the same months, including due at signing and the disposition fee.

Use it alongside calculators for insurance, fuel, and maintenance to build a fuller picture of total cost of car ownership under leasing and buying scenarios. Because leases and loans can have very different mileage limits, repair responsibilities, and warranty coverage, treating those ongoing costs separately helps you understand which structure really fits your driving habits and budget.

A common pattern is that leasing looks cheaper in the short term because monthly payments are lower, while buying looks stronger if you plan to keep the car well past the end of a typical lease. By focusing only on the lease horizon, this calculator lets you isolate the question, “Over the next few years, which option burns fewer dollars after accounting for equity?” You can then extend the analysis on your own if you expect to own a paid‑off car for many years.

You can also use the tool to sanity‑check dealer offers. Plug in realistic depreciation assumptions for the make and model you are considering and compare the result to the lease’s quoted residual value. If the expected equity from buying looks much better than the residual implied by the lease, that is a signal that buying may create more long‑term value, even if the lease’s monthly payment seems attractive at first glance.

Because depreciation, interest rates, and incentives change over time, the lease vs buy answer is rarely one‑size‑fits‑all. Running a few scenarios with different APRs, down payments, lease terms, and depreciation rates can reveal break‑even points where the better choice flips. That exploration is often more useful than hunting for a single “right” answer, especially if you are open to adjusting trim level, options, or how long you keep the car.

Remember that this calculator is designed as a planning aid, not a contract matcher. Your actual paperwork may have additional fees, taxes, or mileage penalties that change the numbers. Treat the outputs as a structured way to think through the trade‑offs between flexibility, monthly cash flow, and long‑term equity rather than a substitute for reading disclosures or asking the dealer to walk through your specific offer line by line.

FAQs

Does this calculator include sales tax or registration fees?: No. Tax and registration rules vary widely by state. You can approximate a tax‑inclusive comparison by adding tax to your monthly payments and/or due‑at‑signing amounts before entering them.
How should I choose the depreciation percentage?: You can start with the lease’s quoted residual value (for example, 58% of MSRP after 36 months) to derive depreciation, or use used‑car valuation tools (like resale values for 3‑year‑old models) for your exact make, model, and expected mileage.
Can I model buying the car at the end of the lease (lease buyout)?: This calculator focuses on the lease term itself. If you plan to buy the car at lease end, you can treat the buyout price plus your lease costs as an additional scenario and compare it separately to financing the car from day one.
Does this reflect mileage overages and wear-and-tear penalties on leases?: Not directly. If you expect to exceed mileage limits or incur wear‑and‑tear charges, you can add an estimated dollar amount to the lease side (for example, add expected overage cost to Disposition fee) to get a closer comparison.
Is this calculator enough to decide how to finance my car?: It’s a great starting point for comparing cash‑flow costs, but it doesn’t capture every factor—like reliability, warranty coverage, financing promotions, or your need for flexibility. Combine these results with dealer quotes and personal preferences, and consider speaking with a financial professional if you’re unsure.

Related calculators

finance

Car Lease Payment Calculator

Estimate monthly lease payment, depreciation, finance charge, and total lease cost with money factor and fees.

This lease vs buy car calculator provides a simplified cost comparison over the lease horizon based on user-entered assumptions. It does not include all taxes, fees, or contract terms and is not financial, legal, or tax advice. Always review actual lease and loan agreements, and consult with qualified professionals before making financing decisions.