How the car lease vs buy calculator works
To compare fairly, both options are measured over the same period, the lease term. With a loan you pay the full price plus interest, but you keep a car with resale value; with a lease you pay for the car's depreciation, a finance charge and fees, and hand the car back.
Cost to lease = Due at signing + monthly payment × term
The resale value is what the car would be worth at the end of the lease term; pricing guides such as Kelley Blue Book or the lease's residual value are good sources. Insurance, maintenance and registration are similar either way and are left out. A lease may add charges for extra mileage, excess wear or a disposition fee, which favour buying if they apply to you.
Worked example
A $35,000 car bought with $5,000 down on a 60-month loan at 6.5% costs $586.98 a month. Over 36 months you pay about $4,308 in interest; if the car is then worth $21,000, owning cost about $18,308. Leasing at $399 a month with $3,000 due at signing costs $17,364, so here leasing is about $944 cheaper for three years. Keep the car longer and buying usually wins because the payments end.
Frequently asked questions
Is it better to lease or buy a car?
Buying is usually cheaper long term; leasing gives lower monthly payments and a new car every few years. The answer depends on how long you keep cars and how much you drive.
What is a residual value?
The lessor's forecast of the car's value at the end of the lease, which sets how much depreciation you pay.
Does a down payment on a lease make sense?
Large amounts due at signing are risky: if the car is totalled early, that money is usually lost. Many advisers recommend putting as little down as possible.
What mileage limits do leases have?
Commonly 10,000 to 15,000 miles a year, with charges of about 15 to 30 cents per mile over the limit.
Updated October 2026. Results are estimates for education, not financial or medical advice. All math runs in your browser; nothing you type is sent anywhere.