Auto Lease Calculator · Practical guide
Lease vs Buy a Car: Which Is Cheaper?
Leasing is cheaper month to month; buying is cheaper per year if you keep the car after the loan ends.
At a glance
The Short Answer
Leasing wins on monthly cash flow; buying wins on long-run cost per year if you keep the car well past the loan payoff. On a $40,000 MSRP vehicle negotiated to $37,000 with $3,000 down, a 36-month lease at a 58% residual and 0.00125 money factor costs $397.51/month with 7% tax and about $17,310 total — after which you own nothing.
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Enter your own values, then compare the result with the examples below.
Results
The Comparison
| Lease (36 mo) | Buy (60 mo loan at 8%) | |
|---|---|---|
| Monthly payment | $397.51 | ≈ $689 |
| Total paid in first 3 years | ≈ $17,310 | ≈ $27,800 |
| What you own after 3 years | Nothing | About $23,200 of car with loan nearly half paid |
| Mileage limits | Yes (typically 10-12k mi/yr) | No |
| End of term | Return or buy out | Keep driving payment-free |
When Leasing Makes Sense
Lease if you want a new car every few years, drive under the mileage cap, and prefer warranty coverage for the entire term. The lower payment can also free cash, but remember the cycle never ends — there is always another lease payment.
When Buying Wins
Buy if you keep cars for seven to ten years. Once the loan is gone, your cost drops to maintenance and insurance while a lessee keeps paying. Over a decade, one purchase typically beats three back-to-back leases by thousands of dollars.
Frequently Asked Questions
Can I buy the car when the lease ends?
Yes. Most leases include a purchase option at the residual value. If the car's market price is above the residual at turn-in, buying it out can be a good deal.
What fees come at lease turn-in?
Expect a disposition fee (often $300-$500) plus charges for excess mileage and wear beyond normal. Mileage overages commonly run $0.15-$0.30 per mile.
Is leasing ever cheaper long-term?
Rarely for personal use. It can make sense for businesses that deduct payments, or when a manufacturer subsidizes a lease with an inflated residual or low money factor.
Should I put money down on either option?
On a lease, many experts advise $0 down because a totaled car can mean losing the down payment. On a purchase, a down payment reduces interest cost and prevents being upside down.