How to Use This Calculator
Enter the vehicle price, your down payment, and your local sales tax rate. Then fill in the buy options (loan APR, loan term, expected depreciation) and the lease options (lease term, residual value, money factor). The calculator compares monthly payments and the total net cost of each option over the lease period — so you can see exactly which path costs less.
How Net Cost Is Calculated
Net Cost of Buying
The net buy cost is your down payment plus all loan payments made during the comparison period, minus the equity you've built. Equity equals the vehicle's market value at the end of the comparison period minus whatever you still owe on the loan. Because you own an asset with real value, the net cost of buying is usually lower than the sticker price of the loan suggests.
Net Cost of Leasing
The net lease cost is simply your down payment plus all lease payments over the term. You walk away with nothing — no equity, no resale value — so every dollar paid counts against you. Leasing tends to win on monthly payment, but buying typically wins on net cost unless the vehicle depreciates very quickly.
Why the Comparison Period Matters
This calculator uses the lease term as the comparison window. If your loan term is longer (e.g. 60-month loan vs. 36-month lease), the calculator counts only the loan payments made during those 36 months and the equity you have at that point — keeping the comparison fair. After the lease ends you'd either renew or buy again, so comparing full loan lifecycle vs. one lease term would be misleading.
Key Factors in the Decision
Depreciation
Depreciation is the biggest variable in the buy calculation. New vehicles typically lose 15–25% of value per year, with the steepest drop in years one and two. A car that depreciates fast builds equity slowly, which makes leasing more competitive. Vehicles known to hold their value — trucks, certain Japanese SUVs — tilt the math toward buying. Check Kelley Blue Book or Edmunds for model-specific depreciation estimates.
Monthly Cash Flow
Lease payments are almost always lower than loan payments for the same vehicle. If monthly cash flow is tight, leasing keeps the payment manageable. Just remember: lower monthly payment doesn't mean lower total cost. Run the net cost comparison before deciding.
Mileage and Usage
Leases come with mileage caps — typically 10,000–15,000 miles per year. Excess mileage fees of $0.15–$0.30 per mile can add up quickly for high-mileage drivers. This calculator doesn't model overage fees; if you drive more than 15,000 miles a year, buying is almost always cheaper.
Down Payment Risk
On a lease, your down payment is gone if the vehicle is totaled or stolen early in the term — insurance reimburses the lessor, not you. On a financed purchase, you lose the same amount, but you also have more flexibility to negotiate the loan. Most experts recommend keeping lease down payments low for this reason.
Long-Term Cost
If you always lease, you always have a payment. If you buy and keep a vehicle past the loan payoff date, you eventually drive payment-free — a significant long-term financial advantage. Run the numbers over multiple cycles (lease → new lease vs. buy → keep) to see the true lifetime difference.
Frequently Asked Questions
Is it cheaper to lease or buy a car?
Buying is almost always cheaper in the long run. When you buy, you build equity and eventually own the vehicle outright. When you lease, every payment is an expense with nothing left at the end. The exception: if you lease a vehicle that depreciates sharply (luxury sedans, EVs in a declining market), the depreciation you avoid by leasing can make it cheaper over the specific lease window. Use this calculator with your actual vehicle and numbers to find out which applies to you.
What are the pros and cons of leasing vs. buying a car?
Leasing pros: lower monthly payments, always under warranty, newer vehicle every 2–3 years. Leasing cons: no equity, mileage limits, wear-and-tear fees, perpetual payments. Buying pros: equity builds over time, no mileage restrictions, ownership at payoff. Buying cons: higher monthly payment, depreciation risk, older vehicle over time. The right choice depends on your driving habits, budget, and how long you plan to keep the vehicle.
Should I lease or buy a car in 2026?
In 2026, lease deals on EVs and certain crossovers remain competitive due to manufacturer incentives and federal tax credit pass-throughs. However, high interest rates and elevated vehicle prices have made both options more expensive than a few years ago. The best approach: use this calculator with the current lease offer and prevailing auto loan rates to compare the real numbers for the specific vehicle you're considering.
What happens at the end of a car lease?
At the end of a lease you have three options: return the vehicle and walk away, lease or buy a new vehicle, or purchase the leased vehicle at the predetermined residual value. If the vehicle's market value exceeds the residual value, buying it out can be a good deal — you'd be purchasing below market price. If market value is below residual, returning it is usually better.
Related Calculators
- Auto Loan Calculator — Calculate monthly payments and total interest if you choose to buy.
- Auto Lease Calculator — Get a detailed lease payment breakdown including depreciation and lease fees.
- Negative Equity Calculator — Check if trading in your current vehicle would leave you upside-down.
- Auto Refinance Calculator — Already own a car? See how much you could save by refinancing at a lower rate.