How to use this lease vs buy calculator
- Enter the lease offer: amount due at signing, monthly payment, number of months and disposition fee.
- Enter the purchase details for the same car: price, down payment, loan APR and loan term.
- Estimate what the car will be worth when the lease would end.
- Compare the two totals and the difference between them.
How it's calculated
Both options are measured over the same window: the length of the lease.
Lease cost = amount due at signing + monthly payment × number of months + disposition fee.
Buying cost over the same months = down payment + loan payments made during those months + the loan balance still owed at the end − the car's estimated resale value. Adding the remaining balance and subtracting the resale value treats the purchase as if you sold the car and paid off the loan when the lease would have ended, so the two options are compared on equal footing.
Example: a 36-month lease with $3,000 due at signing, $399 a month and a $395 disposition fee costs $3,000 + $14,364 + $395 = $17,759. Buying the same $35,000 car with $5,000 down and $30,000 financed at 6% APR for 60 months gives a payment of about $579.98. Over 36 months you pay $20,879.43, and $13,086.10 is still owed. If the car is worth $21,000 at that point, the net cost of buying is $5,000 + $20,879.43 + $13,086.10 − $21,000 = $17,965.53. Here, leasing is about $207 cheaper over three years. A resale value just a few hundred dollars higher would flip the result, which is why that estimate matters so much.
Questions to ask before you decide
- How many miles will you really drive? Lease allowances of 10,000 to 15,000 miles a year are common, and overage charges add up quickly.
- How long will you keep the car? If you'd drive it well beyond the loan, buying gets cheaper every year you go without a payment.
- Is the money factor fair? Multiply it by 2,400 for a rough APR equivalent and compare that with loan offers.
- What residual value does the lease assume? A high residual lowers lease payments and also hints at strong resale value if you buy.
- Do you tow, modify or work your car hard? Leases charge for excess wear, so ownership may suit you better.
Good to know: Many US states tax each lease payment rather than the full vehicle price, while a purchase is taxed on the price. Enter figures that include tax on both sides so the comparison stays fair.
Frequently asked questions
Is it cheaper to lease or buy a car?
Over a typical two- to three-year window the two can be close, as this calculator often shows. Buying usually wins if you keep the car for years after the loan is paid off, while leasing can suit drivers who want a newer car every few years and drive moderate miles.
What is a disposition fee?
It's a charge some leasing companies make when you return the car at the end of the lease, to cover inspection, cleaning and resale. It's sometimes waived if you lease or buy another vehicle from the same company. Your lease contract lists the exact amount.
What costs does this comparison leave out?
It doesn't include excess-mileage or wear-and-tear charges on a lease, or the interest your down payment could have earned elsewhere. Insurance and maintenance are assumed to be similar either way, although leases often require higher insurance coverage.