A car lease vs buy calculator estimates the cash each option requires over a chosen holding period and reports a net cost: payments, down payment, tax, maintenance, insurance difference, and mileage charges on both sides, less the vehicle's remaining value on the buy side. The result depends on the price, the loan and lease terms, the depreciation assumption, mileage, and tax entered.
There is no universal answer to whether leasing or buying is cheaper. A lease involves contract payments and return conditions; buying involves loan payments, ownership, and the vehicle's resale value. Compare the contract terms and the costs that matter to your situation rather than deciding from the monthly payment alone.
Two known model defects — read before using the totals
First, terms are not aligned to the holding period. The purchase loan's full term of payments is counted even if the car is sold earlier, and lease terms are rounded up to whole contracts when the holding period does not fit an exact number of leases. As a result, the reported net costs — and which option appears cheaper — can be misleading whenever the terms do not align. The comparison table below sidesteps this by using whole lease terms and holds of at least the loan term.
Second, fees are mis-counted. The acquisition fee is added to the modeled lease capitalized cost and also to the lease upfront amount, so that fee is counted twice. The lease upfront amount is then charged once no matter how many lease terms the model runs, which understates the cost of repeat leasing. The corrected lease column in the table below charges the $4,500 upfront once per term and removes the duplicate $500 fee; those are arithmetic corrections to the displayed output, not different engine results, and they widen the gap rather than close it. The form's annual maintenance and insurance amounts are added to both options equally, so changing those amounts does not change the comparison either. Do not treat the displayed difference as a precise same-period total-cost result.
What a lease-versus-buy comparison considers
The buy side
A purchase loan usually finances the vehicle price after a down payment. Each payment covers interest and repays part of the loan balance. At the end of the loan, the balance may be paid off, while the vehicle still has a resale value that depends on its age, condition, mileage, and market.
The lease side
A lease payment is modeled from the vehicle's capitalized cost, the residual value entered for the end of the lease, and the money factor. Lease contracts also have mileage, condition, and end-of-term requirements. The calculator estimates these costs only to the extent represented by its input fields.
To compare the two choices, consider the full period you expect to use the vehicle, not only the monthly payments. Include the cash you pay up front, financing costs, taxes, likely maintenance and insurance differences, mileage charges, and the value of a vehicle you may still own at the end.
Inputs and assumptions
- Vehicle price and purchase down payment: Determine the amount financed for the purchase estimate.
- Loan rate and term: The calculator accepts an annual loan rate and a loan term from 1 to 10 years.
- Lease term, money factor, residual percentage, acquisition fee, and lease down payment: These inputs determine the modeled lease payment. The residual value is calculated from the vehicle price and the entered percentage.
- Years to keep: Enter a holding period from 1 to 15 years. The model estimates the vehicle's future value using the annual depreciation percentage you provide.
- Mileage: Enter annual driving, the lease's annual mileage limit, and a cost per excess mile to estimate mileage overage.
- Maintenance and insurance: Enter annual amounts as requested by the form; see the note below the list for how these are treated.
- Sales tax: The model applies the entered tax rate to the purchase price on the buy side and to modeled lease payments on the lease side. This does not represent every jurisdiction's tax treatment.
Before you touch the maintenance and insurance fields: in the current calculation the same amounts are added to both options, so they cancel out — whatever you enter there does not change the reported cost difference. Model those differences outside the tool if they matter to your decision.
How the calculator estimates each option
The purchase estimate and depreciation
The purchase payment is estimated from the amount financed, annual loan rate, and full loan term. The modeled vehicle value at the end of the holding period is:
Estimated future vehicle value = vehicle price x (1 - annual depreciation rate)years held
The lease payment and mileage overage
The lease payment uses the entered vehicle price, lease down payment, acquisition fee, residual percentage, money factor, and lease term. The calculator estimates mileage overage with:
Estimated mileage cost = max(0, annual miles - annual lease limit) x cost per mile x years held
These formulas are simplified planning assumptions. A lender's payment schedule, lease contract, tax assessment, or vehicle appraisal may use different amounts and timing. The result is not a financing offer or a prediction of resale value.
What lease versus buy costs over 6, 9, and 12 years
A comparison only means something when both sides cover the same months, so this set uses holding periods that are exact multiples of the 36-month lease and at least as long as the 60-month loan. Every row holds the inputs constant: a $40,000 vehicle, $4,000 down on the purchase, a 6.50% five-year loan, a 36-month lease at a 0.00125 money factor and a 55% residual, a $500 acquisition fee, a $4,000 lease down payment, 15,000 miles a year against a 12,000-mile allowance at $0.25 per excess mile, 12% annual depreciation, $600 a year in maintenance, no insurance difference, and 7% sales tax.
| Holding period | Leases modeled | Buy net cost | Lease net cost (displayed) | Lease net cost (corrected*) | Vehicle value at the end |
|---|---|---|---|---|---|
| 6 years | 2 | $34,086.72 | $49,263.55 | $53,263.55 | $18,576.16 |
| 9 years | 3 | $41,803.74 | $71,645.33 | $80,145.33 | $12,659.14 |
| 12 years | 4 | $47,636.03 | $94,027.10 | $107,027.10 | $8,626.85 |
*Corrected column: the $4,500 upfront charged once per lease term and the duplicate $500 acquisition fee removed — arithmetic on the displayed output, not different engine results. Against the buy column, the corrected gap is $19,176.83 at six years, $38,341.59 at nine, and $59,391.07 at twelve.
Why the gap grows over longer holding periods
Three things in that table are worth separating. The buy side stops adding loan payments after month 60 while the lease side adds a full set of payments every 36 months, so the gap widens with every renewal — $14,664.76 between the six-year and nine-year displayed lease rows, and $16,549.48 between nine and twelve. Per year, buying falls from $5,681.12 at six years to $4,644.86 at nine and $3,969.67 at twelve, a drop of $1,711.45, because the fixed purchase cost is spread across more years while the car keeps losing value. Leasing falls by only $375.00 over the same range, from $8,210.59 to $7,960.59 to $7,835.59, because every term repeats roughly the same depreciation and finance charge. And the buyer still holds something at the end, worth $18,576.16 at six years and $8,626.85 at twelve, while the lessee holds nothing.
The short holding-period case this table omits
A short holding period is where a lease is most defensible, and this table deliberately does not cover it: the model charges the full five-year loan even when the car is sold at year two, so the buy column would be inflated by payments made after the sale. Computed with the tool's own formulas outside the engine, here is the honest three-year version of the same input set. Leasing for exactly one 36-month term costs $26,881.78 net: $4,500 upfront, 36 payments of $509.22 including tax ($18,331.78), $2,250 of mileage overage, and $1,800 of maintenance. Buying costs about $22,511.21 net: $4,000 down, 36 of the loan's payments ($25,357.73), $2,800 of tax, and $1,800 of maintenance — $33,957.73 out of pocket — less $11,446.86 of net sale equity, which is a resale value of $27,258.88 minus the $15,812.36 loan balance the sale must clear. On these inputs, leasing still costs $4,370.57 more over three years; its advantage is the predictable payment and the return option, not the total. Under five years, run that arithmetic with your own resale figure rather than trusting either tool total.
Important limits of the result
The two structural defects are described immediately after the intro above; this section lists what the model leaves out entirely.
The model does not calculate business tax deductions, tax credits, loan payoff balance at the holding date, trade-in offers, vehicle condition, lease return charges beyond the entered mileage estimate, or all contract-specific fees. Tax rules and lease terms vary. Use the signed documents and qualified professional advice for decisions that depend on those details.
For consumer guidance on lease obligations and end-of-term options, see the FTC's car-leasing guide. For auto-financing shopping considerations, consult the CFPB auto-loan guide.
For a monthly lease-payment breakdown, see the Car Lease Calculator. For a purchase payment estimate, use the Auto Loan Calculator. If a lease is nearing its end, compare a purchase option with the Car Lease Buyout Calculator.
Last verified: October 2026. Calculator figures are outputs for the inputs entered; they are not live quotes, current rates, or an offer.