Lease vs Buy Calculator

Lease vs. buy comparison requires calculating the true total cost of each option over the same time horizon — not just the monthly payment. Leases feel cheaper per month because you are only paying for the portion of the vehicle’s value you consume, but buying builds equity that can be recovered at resale.

Total cost of leasing over N months:

Total Lease Cost = (Monthly Payment × N) + Down Payment + Acquisition Fee + Disposition Fee

Total cost of buying over N months:

Total Buy Cost = (Monthly Payment × N) + Down Payment + Interest Paid − Resale Value at Month N

Key definitions:

• Residual value = the lease-end value the manufacturer predicts for the vehicle
• Money factor (MF) = lease equivalent of interest rate → APR ≈ MF × 2,400
• Disposition fee = charged at lease end if you don’t buy or renegotiate (typically $300–$500)
• Mileage overage = charged per mile over the annual limit (typically $0.15–$0.25/mile)

Worked example — 36-month, 12,000 miles/year: Vehicle: $35,000 MSRP

Lease:

• Monthly: $399, Down: $2,500, Acq fee: $700, Disp fee: $400
• Total: ($399 × 36) + $2,500 + $700 + $400 = $18,164
• At end: walk away with nothing

Buy (5-year loan at 6.5% APR, sell at month 36):

• Monthly: $581, Down: $3,500, Total interest over 60 mo: ~$5,400
• Resale value at 36 months (estimated 55% of MSRP): $19,250
• Cost through month 36: ($581 × 36) + $3,500 − $19,250 = $5,166

Leasing makes sense when:

• You prefer driving a new vehicle every 2–3 years
• You drive fewer miles than the lease limit
• The vehicle is for business and lease payments are fully deductible

Buying makes sense when:

• You plan to own the vehicle 5+ years
• You drive more than 12,000–15,000 miles per year
• You want to build equity and eliminate monthly payments eventually