🚗 Auto Lease vs Buy & Cost of Ownership Calculator
A car lease vs buy calculator comparing the true cost of each: monthly payments, money down, interest, and the resale equity a lease never builds.
Usually the lease term, so both sides cover the same period.
Leasing
Buying with a loan
Varies hugely by model. Check a used-value guide for yours rather than trusting a default.
Leasing is $2,187 cheaper over 36 months.
The comparison stops at month 36, but the loan runs another 24 months. That is the real asymmetry: keep paying and you end up owning the car outright, after which your cost is zero. Lease again and you start the same payments over. Over ten years that difference dwarfs anything above.
The loan balance is computed by real amortization, not a rule of thumb — after 36 of 60 payments at 5.9% you still owe 44% of what you borrowed, because early payments are mostly interest. Insurance, maintenance, registration and taxes are excluded; they differ between the two options less than people expect, except that a leased car is usually under warranty for the whole term.
What Auto Lease vs Buy & Cost of Ownership Calculator Does
Leasing and buying answer different questions, and comparing them honestly means comparing the same period. Over three years a lease costs you the payments and leaves you with nothing; a loan costs you the payments and leaves you with a car worth something minus what you still owe. The difference between those two is the only fair comparison, and it turns on a number most calculators guess at: how much of the loan is left.
That number is not a fixed fraction. On a five-year loan, after three years you have made 60% of the payments but you do not owe 40% — early payments are mostly interest, so more principal survives than you would expect. At 0% you would owe exactly 40%; at 5.9% it is 43.6%; at 12% it is 47.3%. Calculators that hardcode a percentage are wrong at both ends of that range.
The second thing that decides it is mileage. Lease agreements cap your annual miles and charge for every one over, usually 15 to 30 cents. Ten thousand excess miles over three years at 25 cents is $2,500 — enough to reverse the answer on its own, and it lands as a bill at the end when you have no leverage.
The largest factor is not in the arithmetic at all. A lease repeats forever; a loan ends. Keep a bought car past the loan and your cost drops to insurance and maintenance, and over ten years that dwarfs any three-year comparison. Leasing buys you a new car every three years and a permanent payment.
How to Use Auto Lease vs Buy & Cost of Ownership Calculator
- Enter vehicle price, lease monthly payment, and lease down payment
- Input auto loan down payment and interest rate
- Review the side-by-side total 3-year cost comparison and equity advantage
Formula Used by Auto Lease vs Buy & Cost of Ownership Calculator
What is left on the loan after k payments
balance = P(1+r)ᵏ − PMT · ((1+r)ᵏ − 1) ÷ r, where PMT = P·r(1+r)ⁿ ÷ ((1+r)ⁿ − 1)
- P
- amount borrowed — the price minus your deposit
- r
- monthly rate, the annual APR divided by 12
- n, k
- the full term, and the number of payments actually made
Worked example
$38,000 car, $5,000 down, 5.9% APR over 60 months, compared at month 36.
- Borrowed: $33,000. Payment: $636.44 a month
- Paid by month 36: $5,000 + 36 × $636.44 = $27,912
- Still owed: $14,375 — which is 43.6% of what you borrowed, not 40%
- Car at 55% of $38,000 = $20,900, so equity is $6,525
Result: Net cost of owning for three years: $27,912 − $6,525 = $21,387, against a lease at $3,000 + 36 × $450 = $19,200.
How much of a 60-month loan survives to month 36
The share of the original balance still owed. A fixed assumption is wrong across this whole range.
| APR | Still owed at month 36 |
|---|---|
| 0% | 40.0% |
| 3% | 41.8% |
| 5.9% | 43.6% |
| 9% | 45.4% |
| 12% | 47.3% |
What each option is actually good at
| Leasing | Buying with a loan | |
|---|---|---|
| Monthly payment | Lower for the same car | Higher |
| At the end | Hand it back, own nothing | Own the car |
| Mileage | Capped, charged per mile over | Unlimited |
| Modifications | Not allowed | Yours to make |
| Wear | Charged at return | Your problem either way |
| Repairs | Usually under warranty throughout | Yours once the warranty ends |
| Getting out early | Expensive, often the remaining payments | Sell it and settle the loan |
| After the term | Start again | Payments stop |
How to Read Your Result
Negative equity is the failure mode to watch
A long term with a small deposit can leave you owing more than the car is worth for years. You cannot sell without writing a cheque, and if the car is written off the insurer pays market value, not your balance — which is what gap insurance exists to cover. If the calculator shows negative equity at your comparison point, that is the finding.
Lease payments are priced off depreciation, not the car
A lease charges you the value the car loses over the term plus finance on the balance, which is why a model with a strong resale value leases cheaply and a model that depreciates hard leases badly. Two cars at the same price can differ by hundreds a month for that reason alone.
Check the mileage cap against how you actually drive
Not how you intend to drive. Overage is charged at the end, in one bill, and it is the most common unpleasant surprise in leasing. If you are near or over the cap, buying the extra miles up front is normally cheaper than paying the penalty rate.
Money down on a lease is at risk
A deposit on a purchase becomes equity. A deposit on a lease is prepaid rent — if the car is written off in month four, that money is generally gone. Lease deals are usually better structured with as little down as the finance company will accept.
Limitations & Accuracy Notes
- Insurance, maintenance, registration, taxes and fuel are excluded. They differ less between the options than people assume, except that a leased car is normally under warranty throughout.
- Resale value is an input, not a forecast. It varies enormously by model, condition and mileage, and the default is only a starting point.
- Lease-end charges for wear, damage and disposition fees are not modeled.
- Assumes a fixed-rate amortizing loan with no early settlement.
- Tax treatment for business use, which can change the answer entirely, is not considered.
- Nothing here is financial advice.
Frequently Asked Questions
What is the main financial difference between leasing and buying a car?
When is car leasing better than buying?
What is a money factor and how does it relate to APR?
What is residual value and why does it matter so much?
Is leasing cheaper than buying?
What costs catch people out at lease end?
Is my data stored?
References & Further Reading
- US Consumer Financial Protection Bureau — auto loans — How auto loan amortization and negative equity work, from the US regulator