Car Lease vs Buy Calculator
Compare total cost over your time horizon, including payments, taxes, and mileage overage. Make an informed decision between leasing and buying your next car.
Buy
Lease
Break-Even Analysis
What This Means:
The lease option saves you $22,886 over your 5-year ownership horizon. This analysis accounts for all costs including down payments, monthly payments, taxes, and potential overage fees.
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Disclaimer: This calculator provides educational estimates only and should not be considered financial advice. Actual results may vary based on market conditions and other variables. Consult with a qualified financial advisor for personalized advice.
Understanding Lease vs Buy
The decision between leasing and buying a car depends on your financial situation, driving habits, and long-term goals. Our calculator helps you compare the true costs of both options over your ownership horizon.
When to Buy:
Long-term Ownership
- Plan to keep the car for 5+ years
- Want to build equity in the vehicle
- Drive more than 12,000-15,000 miles/year
- Prefer no mileage restrictions
Financial Benefits
- No monthly payments after loan payoff
- Can sell or trade-in anytime
- Build equity for next car purchase
- Lower long-term cost with good maintenance
When to Lease:
Short-term Needs
- Want a new car every 2-3 years
- Drive under 12,000-15,000 miles/year
- Prefer lower monthly payments
- Want latest technology and safety features
Business Benefits
- Tax advantages for business use
- No resale value concerns
- Warranty coverage during lease term
- Lower upfront costs
Key Cost Factors:
Buying Costs
- Down payment
- Sales tax (one-time)
- Interest on loan
- Depreciation
- Maintenance after warranty
Leasing Costs
- Drive-off amount
- Monthly payments
- Mileage overage fees
- Excess wear and tear
- Disposition fee
Shared Costs
- Insurance
- Registration
- Maintenance during warranty
- Fuel
- Parking
Lease vs Buy Decision Matrix:
| Factor | Lease | Buy |
|---|---|---|
| Monthly Payment | Lower | Higher |
| Upfront Cost | Lower | Higher |
| Total Cost (3 years) | Higher | Lower |
| Mileage Flexibility | Limited | Unlimited |
| Ownership | No | Yes |
| New Car Frequency | Every 2-3 years | Every 5+ years |
Tips for Better Decisions:
- Consider your driving habits: High mileage drivers typically benefit from buying
- Factor in total cost of ownership: Include insurance, maintenance, and depreciation
- Think about your financial situation: Can you afford the higher monthly payments of buying?
- Consider your lifestyle: Do you prefer driving new cars or keeping cars long-term?
- Negotiate both options: Compare lease deals and loan rates from multiple sources
- Read the fine print: Understand all fees, restrictions, and penalties
- Consider your credit score: Better credit gets better rates for both options
Common Mistakes to Avoid:
- Focusing only on monthly payment without considering total cost
- Not accounting for mileage overage fees when leasing
- Ignoring the impact of down payment on monthly payments
- Not considering the time value of money in your comparison
- Forgetting about sales tax differences between states
- Not negotiating the purchase price before discussing financing