⚖️ Lease vs. Buy Calculator
Compare car lease vs buy costs over 3 years with equity analysis
How This Calculator Works
Compares total 3-year cost of leasing versus buying the same vehicle. Leasing costs: down payment, monthly payments, fees. Buying costs: down payment, loan payments, minus resale value after 3 years. The calculator shows which option costs less and by how much, accounting for vehicle depreciation and opportunity cost of capital.
Key insight: Leasing means perpetual payments with zero equity. Buying means you own an asset worth 50-60% of purchase price after 3 years. Leasing makes sense if you want new cars every 3 years and don't drive much. Buying wins if you keep cars long-term or drive high mileage.
Example Calculation
Example: $35,000 Vehicle, 3-Year Comparison
Lease: $3,000 down, $400/month, 36 months. Total: $3,000 + $14,400 = $17,400. At end: Zero equity, return car or buy for residual (~$20k).
Buy: $7,000 down, $550/month, 5% APR, 60-month loan. After 36 months: Paid $26,800 total ($7k + $19.8k payments), owe $11,200 remaining, car worth $20,000. Net cost: $26,800 - $8,800 equity = $18,000.
Result: Leasing $17,400 vs Buying $18,000 net cost - nearly identical for 3 years. BUT if you keep the car for 6 years, buying wins massively: paid off asset worth $12k vs leasing $34,800 with zero equity.
Common Questions
When does leasing make financial sense?
Leasing can make sense if: (1) You're self-employed and can write off lease payments as business expense, (2) You drive under 12k miles/year (excess mileage fees are brutal), (3) You absolutely need a new car every 3 years (though this is expensive long-term), (4) Manufacturer offers heavily subsidized lease (money-losing deal for them, good for you). For most people, buying and keeping 10+ years is cheaper.
What about lease-to-own or buying out the lease?
Buying out your lease at end of term is usually a bad deal. You've already paid depreciation premium in lease payments, then pay full residual value which is often above market rate. Better: Buy from the start if you plan to keep it. Lease-to-own programs are financing gimmicks with higher total costs than straightforward purchase loans.