Rent vs Own Car Calculator

The rent vs. buy decision for a vehicle involves comparing the true total costs of each option over the same time horizon, including often-overlooked factors like opportunity cost of a down payment, tax benefits, and residual value.

Total Cost of Buying: Buy Cost = Down Payment + (Monthly Payment × Loan Term) + Insurance + Maintenance + Registration − Resale Value

Total Cost of Renting / Leasing: Lease Cost = (Monthly Lease Payment × Lease Term) + Down Payment + Insurance + Disposition Fee

Break-Even Formula: Break-Even Months = (Purchase Price − Resale Value) ÷ (Monthly Lease − Monthly Buy Payment)

What each variable means:

• Down Payment — upfront cash (reduces loan or lease drive-off cost; represents opportunity cost).
• Residual Value — what the car is worth at the end of the loan (varies by depreciation rate and model).
• Disposition Fee — charged at lease end if you don’t purchase or re-lease (typically $300–$500).
• Maintenance — leases often cover 3 years under warranty; older owned vehicles cost more.

Depreciation rate (approximate):

• Year 1: 15–25% of new car value
• Year 2: 10–15%
• Year 3: 8–12%
• After 5 years: ~40–60% of original value remaining

Worked example (3-year comparison, $30,000 car): Buy: $3,000 down + $520/month × 36 + $1,200 maintenance − $18,000 resale = $3,720 net cost Lease: $2,000 down + $389/month × 36 + $395 disposition = $16,399 net cost

In this example, buying is cheaper by ~$12,679 if you keep the car’s equity. But if you prefer always driving a new car, leasing’s predictability and lower monthly payments have real value.