Lease Calculator · Practical guide
Is It Better to Lease or Buy a Car?
Leasing wins on monthly cash flow; buying wins on long-term cost. The numbers below show exactly where the line falls.
At a glance
The Short Answer
Buying is cheaper over time; leasing is cheaper per month. Lease if you want a new car every few years and drive under the mileage limit. Buy if you keep cars 6+ years — after the loan ends, you drive payment-free while the leaser starts another contract.
Interactive tool
Lease Calculator
Enter your own values, then compare the result with the examples below.
Same Car, Side by Side
Take a $38,000 car (negotiated price). Lease it for 36 months with $2,000 down, a $5,000 trade-in, 55% residual, 0.00125 money factor, and 7% tax — or buy it with a 5-year loan at 5% APR:
| Lease (36 mo) | Buy (60 mo loan) | |
|---|---|---|
| Monthly payment | $338.39 | $717.11 |
| Total paid over term | $14,181.95 | $43,026.41 |
| What you own at the end | Nothing | The car outright |
| Mileage limits | Yes (typically 10-12k/yr) | No |
Why Buying Usually Wins Long-Term
The buyer's higher payment builds equity: after month 60 the payments stop but the car keeps going. Two back-to-back 3-year leases on similar cars would cost about $28,400 over 6 years with nothing to show at the end, while the buyer spends about $43,000 once and still owns an asset worth roughly $15,000 or more.
When Leasing Makes Sense
- You drive under about 12,000 miles per year.
- You want warranty coverage the entire time you have the car.
- You can deduct the payment as a business expense.
- You value a lower payment and a new car every 2-3 years over long-run savings.
Run both scenarios before you sign: the lease calculator above gives your exact monthly and total lease cost, which you can compare against a loan quote on the same car.
Frequently Asked Questions
Is leasing ever cheaper than buying?
Month to month, almost always — lease payments run roughly half of a loan payment on the same car. Over many years, buying wins because you eventually stop paying and keep the asset.
What happens if I exceed the mileage limit on a lease?
You pay an excess-mileage charge at turn-in, typically $0.15-$0.30 per mile. Driving 5,000 miles over the limit can add $750-$1,500 to the cost of the lease.
Can I buy the car at the end of a lease?
Yes — you can purchase it for the residual value written into the contract. If the car's market value is higher than the residual at turn-in, buying it out can be a good deal.
Should I put money down on a lease to lower the payment?
Generally no. If the car is totaled early in the lease, the insurance payout goes to the leasing company and your down payment is gone. Keep the cap cost reduction minimal.