Lease vs Buy Calculator: Which Costs Less?

The lease payment on the car you want is $340 a month. Financing the same car would run you $520 a month. On the surface, leasing looks like the obvious win — until you remember that at the end of a 3-year lease you’re handing the car back and starting over, while at the end of a 5-year loan you own something you can drive for free, sell, or trade in. Comparing the monthly number alone isn’t really comparing anything.

This is the same trap people fall into with rent vs buy on a house, just on a shorter timeline and with a depreciating asset instead of an appreciating one. A lease vs buy calculator exists because the two paths have genuinely different shapes: leasing is a lower, predictable monthly cost with nothing to show for it afterward; buying is a higher monthly cost that builds toward an asset you keep. Getting an honest answer means running both all the way to the end, not stopping at the payment.

What “lease vs buy” actually involves

A fair comparison needs to account for more than the sticker payment:

• Upfront cash: leases often ask for a smaller down payment (or none) than a purchase, which changes how much cash you tie up on day one.
• The monthly payment itself: a lease payment covers the vehicle’s depreciation over the lease term plus a finance charge; a loan payment covers the full purchase price plus interest.
• Mileage limits and wear-and-tear charges: leases typically cap annual mileage (commonly 10,000–15,000 miles) and can bill you per mile over that limit, plus for damage beyond normal wear at turn-in.
• What you have left at the end: a paid-off loan leaves you with a car you can keep driving, sell, or trade — a lease leaves you with nothing unless you buy it out at the residual value.

The Consumer Financial Protection Bureau’s guide to leasing versus buying a car is a good plain-language rundown of these mechanics if you want the regulator’s version before you run your own numbers.

Why people get stuck here

The most common mistake is comparing the lease payment to the loan payment and calling it done. They aren’t measuring the same thing — the loan payment is buying you an asset, the lease payment is renting the use of one. A $180/month difference looks huge until you weigh it against owning a car outright at the end of five years.

The second mistake is ignoring your actual driving habits. If you regularly put 18,000 miles a year on a car, a lease built around a 12,000-mile cap will cost you real money in overage fees — often $0.15–$0.30 per extra mile — that never shows up in the advertised monthly rate.

The third mistake is assuming you’ll want a new car again in three years anyway, so leasing “resets for free.” It doesn’t — you’re either leasing again (a new payment starts immediately) or buying, and that decision compounds every time you renew instead of ever letting a loan reach $0.

What a good comparison looks like

Get the true cost of leasing right

Beyond the monthly payment, include any due-at-signing cash, acquisition and disposition fees the dealer charges, and a realistic estimate of mileage or wear charges based on how you actually drive — not the lease’s advertised mileage allowance.

Get the true cost of buying right

Include the down payment, loan interest over the full term, and ongoing costs a lease usually bundles in differently, like maintenance once the warranty runs out. Then subtract what the car is realistically worth if you sold or traded it at the end of your comparison period — that resale value is buying’s biggest advantage and the easiest thing to leave out of a back-of-envelope estimate.

Match the comparison to how long you’ll actually keep the car

A lease vs buy calculator only gives a useful answer over a matched time horizon. If you compare a 3-year lease to owning a car for 3 years, buying looks worse because a loan hasn’t built much equity yet. If you compare it to owning for 6-7 years — long enough to pay off the loan and keep driving payment-free — the math usually flips.

Common mistakes to avoid

• Comparing the lease payment to the loan payment without accounting for what you own at the end of each path.
• Underestimating your actual annual mileage and getting hit with per-mile overage charges at lease-end.
• Forgetting acquisition, disposition, and end-of-lease wear-and-tear fees when totaling the true lease cost.
• Ignoring resale value when comparing to a purchase — a sold or traded car recovers real money a returned lease vehicle never does.
• Running the comparison over a mismatched time horizon instead of how long you’ll realistically keep the vehicle.

How to do it with Lease vs Buy Calculator

1. Open the Lease vs Buy Calculator.
2. Enter the vehicle’s price, along with the lease’s monthly payment, term, and any due-at-signing amount.
3. Add the loan details for buying — down payment, interest rate, and loan term — for the same vehicle.
4. Enter your expected annual mileage so the tool can flag potential lease overage costs against your real driving habits.
5. Set an estimated resale or trade-in value for the “buy” path at the end of your comparison period.
6. Read the result: a side-by-side total cost for leasing versus buying over your chosen horizon, calculated entirely in your browser with nothing uploaded anywhere.

Frequently asked questions

Is leasing always cheaper than buying?

Not in total cost — leasing usually has a lower monthly payment, but you own nothing at the end, while a fully paid-off loan leaves you with an asset you can keep or sell. Whether leasing or buying wins financially depends on how long you keep vehicles and how much you drive.

What mileage limit should I expect on a lease?

Most leases set annual limits between 10,000 and 15,000 miles, with a per-mile fee for anything over that at lease-end. If you consistently drive more than that, factor the overage cost into the comparison — it can erase a lease’s monthly-payment advantage.

Does leasing make sense if I want a new car every few years?

It can, since leasing avoids the drop in trade-in value that hits a financed car early in its loan, and it keeps you under warranty most of the time. Just know you’re committing to a new payment every lease cycle instead of eventually reaching $0.

What’s the biggest thing people forget when comparing leasing and buying by hand?

Resale value. A car you buy and eventually sell or trade recovers a meaningful chunk of what you paid; a leased car returned at the end of the term recovers nothing extra beyond what you already paid in.

Final thought

There’s no universal answer to “lease or buy” — it depends on your mileage, how long you actually keep a car, and what a comparable vehicle is worth used at the point you’d trade it in. The FTC’s guide to financing or leasing a car covers the negotiation side well; pair that with your own numbers in a calculator that accounts for mileage limits and resale value, and let the total cost — not the monthly payment — make the call.

Try the free Lease vs Buy Calculator