Lease vs Buy Calculator
Compare the true cost of leasing versus buying a vehicle.
| Cost Item | Lease | Buy |
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💡 Lease vs Buy: Key Considerations
Mileage Matters
Leases typically limit you to 10,000-15,000 miles/year. Exceeding costs $0.15-$0.30 per mile. High mileage drivers usually save more by buying.
New Car Frequency
If you want a new car every 2-3 years, leasing may work. If you keep cars 5+ years, buying is almost always cheaper.
Maintenance & Repairs
Leased cars are usually under warranty. Owned cars may need more maintenance after warranty expires, but you have full control.
Equity Building
Buying builds equity—you own an asset. Leasing is like renting—no ownership at the end. Consider your long-term financial goals.
📚 Understanding Lease vs Buy
The lease vs buy decision is one of the most significant financial choices you'll make when getting a vehicle. Both options have distinct advantages and trade-offs that depend on your financial situation, driving habits, and personal preferences.
Leasing is essentially a long-term rental. You pay for the vehicle's depreciation during your lease term, plus interest (called the "money factor") and fees. At the end, you return the car with nothing to show for your payments—but you've had a new car with lower monthly payments and warranty coverage throughout.
Buying means you own the vehicle outright (or will, once the loan is paid). Monthly payments are typically higher, and you're responsible for maintenance after the warranty expires. However, you build equity and can sell the car whenever you want. The longer you keep it, the more value you extract from your purchase.
This calculator compares the true total cost of each option over the same time period, accounting for payments, fees, taxes, and (for buying) the resale value you'll recover when you sell.
🎯 When to Lease vs When to Buy
Leasing May Be Better If You:
- Want a new car every 2-3 years with latest features
- Drive less than 12,000-15,000 miles per year
- Prefer lower monthly payments
- Want to always be under warranty coverage
- Use the vehicle for business (potential tax deductions)
- Don't want to deal with selling/trading a car
Buying May Be Better If You:
- Plan to keep the vehicle 5+ years
- Drive more than 15,000 miles per year
- Want to build equity in an asset
- Like to customize or modify your vehicle
- Have good credit for favorable loan rates
- Want no mileage restrictions or wear-and-tear concerns
❓ Frequently Asked Questions
What is the "money factor" in a lease?
The money factor is the interest rate on a lease, expressed differently. To convert to APR, multiply by 2,400. For example, a money factor of 0.00125 equals 3% APR (0.00125 × 2,400 = 3%). Lower is better.
Can I negotiate a lease like I would a purchase?
Yes! You can negotiate the capitalized cost (vehicle price), money factor, and sometimes acquisition fees. Many people don't realize lease terms are negotiable. Always negotiate the price first, then discuss the lease terms.
What happens if I exceed my mileage limit?
You'll pay an excess mileage fee, typically $0.15-$0.30 per mile over the limit. On a 3-year lease with a 10,000-mile annual limit, going 5,000 miles over could cost $750-$1,500. Consider buying extra miles upfront if you anticipate going over.
Is it better to buy a used car instead?
Often, yes. A 2-3 year old certified pre-owned vehicle offers the best value—someone else absorbed the steep initial depreciation, yet it's still relatively new with remaining warranty. Compare this option alongside lease and new purchase.
What about gap insurance?
Gap insurance covers the difference between what you owe and what your car is worth if it's totaled. It's often included in leases (check your contract). For purchases with small down payments, it's highly recommended—get it through your auto insurer for the best rate.
Can I get out of a lease early?
Yes, but it's usually expensive. Options include paying an early termination fee, transferring the lease to someone else (if allowed), or buying out the lease. Some services like Swapalease help find people to take over leases. Always calculate the true cost before signing.