Leasing usually means lower monthly payments; buying means you keep something of value at the end. The fair way to compare them is the net cost over the same period: everything you pay, minus whatever you still own when the period ends.
How the comparison works
Lease net cost = due at signing + monthly payments × months + disposition fee + any mileage or wear charges.
Buy net cost = down payment + loan payments made during the period − (estimated value of the car at the end − loan balance still owed).
Whichever is lower is cheaper over that period, with your assumptions. The comparison period defaults to a typical 36-month lease.
The number that decides it: value at the end
The buy side depends on what the car is worth when the period ends. We don't have market price data, so you set it as a percentage of the price. The lease contract's residual value (the price the leasing company expects the car to be worth at lease end) is a useful reference: it's the lessor's own forecast.
Try a few values. If buying only wins when you assume an unusually high resale value, leasing may be the safer choice for you.
Things the calculator leaves out
- Insurance, fuel and maintenance, which are similar either way (leases sometimes include scheduled maintenance; add it if so).
- Taxes on lease payments, which many states charge monthly. Add them to your monthly payment.
- What your down payment could earn if invested instead.
- Keeping the car longer. Buying usually looks better the longer you keep the car after the loan is paid off.
When each one tends to make sense
| Leasing tends to suit you if… | Buying tends to suit you if… |
|---|---|
| You want a new car every 2–4 years | You keep cars for many years |
| You drive within the mileage allowance | You drive a lot of miles |
| You want lower payments and warranty coverage throughout | You want no mileage limits or wear charges |
- You want a new car every 2–4 years
- Buying tends to suit you if…
- You keep cars for many years
- You drive within the mileage allowance
- Buying tends to suit you if…
- You drive a lot of miles
- You want lower payments and warranty coverage throughout
- Buying tends to suit you if…
- You want no mileage limits or wear charges
For more financing options, our sister site has a detailed lease vs buy calculator (opens in a new tab) and an auto lease calculator (opens in a new tab).
Frequently asked questions
Is it better to lease or buy a car?
It depends on how long you keep cars, how far you drive and the deals on offer. Compare the net cost of both quotes over the same period with the calculator above.
What is a residual value?
The leasing company's estimate of the car's value at the end of the lease, set in the contract. It's also the usual buyout price.
Why does the lease look cheaper per month but cost more overall?
You're paying for the car's depreciation during the lease plus finance charges, and you own nothing at the end. Buying costs more per month but leaves you with an asset.
Results are estimates from the numbers you enter and, where noted, EPA ratings. Not financial advice. Page updated .