The advertised lease payment hides the full story. Compare normalized true annual cost — depreciation and equity included.
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Leasing finances depreciation plus a rent charge for a fixed term, while buying builds (or loses) equity you recover at resale. This calculator totals the genuine multi-year cost of each path, purchase financing minus residual value versus lease payments plus acquisition costs, then normalizes to an annual figure for apples-to-apples judgment.
Shoppers at the dealership torn between the attractive advertised lease and a finance contract, households budgeting transport costs with our auto loan calculator, high-mileage commuters, and business owners evaluating write-off angles with their accountant.
Example Input
Price: $38,000. Buy: $3,000 down, 6.5% APR, 60 months, resale ~55% after 5 yrs. Lease: $430/mo, 36 mo, $2,500 due at signing.
Sample Output
Buy total 5-yr net cost: ~$24,300 after resale equity. Lease 3-yr cost: ~$17,980 then repeat. Per-year, leasing costs more continuously, but buying demands the higher payment and repair-risk after warranty.
Example Input
18,000 miles/year commute.
Sample Output
Lease overage at $0.25/mile adds ~$2,250/yr, flipping the verdict decisively toward buying. The calculator's mileage-adjusted view prevents the classic lease trap.
Negotiating at the desk: enter the dealer's actual money factor and residuals; comparing warranty-covered lease years versus post-warranty repair exposure; testing EV lease incentives that manufacturers subsidize heavily; and planning the buy-and-drive-it-a-decade strategy versus perpetual leasing.
For buying: price, down payment, APR, term, and a realistic resale percentage at your comparison horizon (check KBB for the model's curve). For leasing: monthly payment, term, drive-off amount, and your true annual mileage against the allowance. We compute buy-side net cost as financing total minus projected resale, lease-side as payments plus upfront fees, annualized over the same horizon.
Comparing lease payment against buy payment directly ignores that leases never build equity. Ignoring mileage penalties (typically $0.15-$0.30/mile over) wrecks lease economics for commuters. Disposition fees, acquisition fees, gap insurance differences, wear-and-tear exposure, and sales-tax treatment by state are simplified here, so treat outputs as planning-grade estimates, then negotiate the capitalized cost itself.
Leasing suits drivers who value always-driving a warrantied vehicle, business users capturing deductions, EV shoppers exploiting manufacturer-supported money factors, and anyone prioritizing lower fixed monthly costs over long-term wealth. Buying wins cumulative cost in most scenarios, especially past year five.
Return the car (inspection for excess wear/miles, disposition fee applies), buy it at the residual value stated in your contract, or lease again. Positive market equity occasionally makes buying the residual and reselling profitable, worth checking against used prices before returning.
Benchmark effective monthly cost against roughly 1% of MSRP for a 36-month term with standard allowances, and always negotiate capitalized cost like a purchase. Our calculator reveals whether the advertised payment hides inflated drive-off fees or thin mileage allowances.
Runs instantly and privately in your browser on phones and desktops alike, no dealer lead forms feeding your info to call centers. Adjust resale assumptions pessimistically and optimistically to see how robust each verdict is before you sign anything.
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