What is the Lease vs Buy Calculator?
This calculator compares the total out-of-pocket cost of leasing a vehicle against buying one over the same period. Leasing usually has lower monthly payments but you keep no asset at the end. Buying costs more per month but you own the car and can recover some value by reselling it. This tool nets those factors into a single side-by-side comparison.
How to use it
Enter the comparison term in months (commonly 36). For the lease option, enter the upfront down payment (or drive-off/cap-cost reduction) and the monthly lease payment. For the buy option, enter your down payment, monthly loan payment, and the estimated resale (or trade-in) value of the car at the end of the term. The result shows the total cost of each path and which is cheaper.
The formula explained
Total lease cost is simply the lease down payment plus each monthly payment over the term: \(\text{Lease} = D_L + P_L \times t\). Total buy cost adds your down payment and loan payments, then subtracts the resale value because that money comes back to you: \(\text{Buy} = D_B + P_B \times t - R\). The option with the lower total wins, and the difference is your savings.
$$\Delta = \left| \text{Lease Cost} - \text{Buy Cost} \right|$$$$\left\{ \begin{aligned} \text{Lease Cost} &= \text{Lease Down} + \text{Lease Payment} \times \text{Term} \\ \text{Buy Cost} &= \text{Buy Down} + \text{Loan Payment} \times \text{Term} - \text{Resale Value} \end{aligned} \right.$$
Worked example
Term = 36 months. Lease: $2,000 down + $350/mo → \(2000 + 350\times36 = \$14{,}600\). Buy: $5,000 down + $450/mo − $15,000 resale → \(5000 + 450\times36 - 15000 = 5000 + 16200 - 15000 = \$6{,}200\). Buying is cheaper by $8,400 because the strong resale value offsets the higher payments.
FAQ
Does this include interest? Interest is already baked into the monthly payment figures you enter, so it is captured indirectly.
Should I include insurance or maintenance? This model compares core financing costs. If those differ between options, fold them into the monthly payment values.
What resale value should I use? Estimate the trade-in or private-sale value of the car at the end of your term; a higher resale value makes buying more attractive.
