Car Lease vs Buy Calculator to Calculate Cost Comparison Analysis

Car Lease vs Buy Calculator Sign

This online lease versus finance calculator will calculate a total and year-to-year cost comparison for a vast array of lease versus buying a car scenarios.

And unlike other online auto lease calculators, this calculator will generate a lease versus buy car analysis for the number of years you expect to repeat the auto lease or auto purchase.

If you would just like to calculate a lease payment, visit the Automobile Lease Calculator.

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Car Lease vs Buy Calculator

Calculate lease versus buy car analysis for any number of years.

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Selected Data Record:

A Data Record is a set of calculator entries that are stored in your web browser's Local Storage. If a Data Record is currently selected in the "Data" tab, this line will list the name you gave to that data record. If no data record is selected, or you have no entries stored for this calculator, the line will display "None".

DataData recordData recordSelected data record: None
Mutual Entries
Buy priceBuy pricePurchase pricePurchase price:

Purchase price:

Enter the purchase price of the car less any dealer rebates or cash incentives. This price will be used for both buying and leasing scenarios.

$
Down pmtDown pmtDown paymentDown payment:

Down payment:

Enter the amount of cash you plan to pay up front. For leasing, the amount is referred to as a prepayment, as in the prepayment of depreciation. For buying, this amount is referred to as a down payment, which effectively lowers the amount of money you need to borrow for the purchase.

$
Sales taxSales taxSales tax rateSales tax rate:

Sales tax rate:

Enter the combined total percentage of all applicable tax rates (state, local, etc.). Enter as a percentage but without the percent sign (for .07 or 7%, enter 7). For leasing, the taxes will be added to each lease payment. For buying, the taxes will be included in the loan amount.

%
ROIROIRate of return on investmentsRate of return on investments:

Rate of return on investments:

Enter the annual percentage return you expect to earn on your investments. Enter as a percentage but without the percent sign (for .06 or 6%, enter 6). This entry will be used to calculate lost interest earnings that may result from choosing buying instead of leasing or visa versa.

%
YearsYearsNumber of years to compareNumber of years to compare lease vs buy:

Number of years to compare lease vs buy:

Enter the number of years you would like run the lease vs buy scenario for. A new car lease will be generated at the end of each lease, and a new car purchase will be generated at the end of each ownership term.

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Split entries

Split entries:

Lease: Lease entry fields are located in the left-hand fields.

Buy: Buy entry fields are located in the right-hand fields.

Lease
Buy
Months:

Months:

Lease: Enter the lease term in number of months into the left-hand field. The typical lease term is 24 months. Lease terms over 36 months will usually offset any benefits to be gained by leasing.

Buy: Enter the loan term in number of months into the right-hand field. The shorter the loan term, the higher the monthly payments will be and the lower the finance charges will be. Conversely, the longer the loan term, the lower the monthly payments, but the higher the finance charges will be.

Interest rate:

Interest rate:

Lease: Enter the annual interest rate of the lease into the left-hand field. If the lease terms state a Money Factor, multiply the money factor by 2,400 to arrive at the annual interest rate. Enter the interest rate as a percentage, but without the percent sign (for .09 or 9%, enter 9).

Buy: Enter the annual interest rate of the car loan into the right-hand field. Enter the interest rate as a percentage, but without the percent sign (for .09 or 9%, enter 9).

Fees:

Fees:

Lease: Enter the total of any upfront fees that will be due at signing (acquisition fees, etc.) into the left-hand field.

Buy: Enter the total of any upfront fees that will be due at the time of purchase (title, transfer, loan fees, etc.) into the right-hand field.

Both: Enter as dollar amounts but without the dollar sign or any commas. Also, do not include the down payment as it has its own entry field at the top of the car lease vs buy calculator.

Residual and depreciation:

Residual and depreciation percentages:

Lease: Enter the expected residual value percentage (RV%) into the left-hand field. The residual value percentage estimates the market value of the car at the end of the lease. So if the RV% is 55%, the car is expected to be worth 55% of its original purchase price at the end of the lease. As a reference point, the RV% is usually 50%-58% for a 36 month lease.

Buy: Enter the annual depreciation percentage of the vehicle into the right-hand field. If you expect the car to depreciate quickly, enter 20%. For average rate of depreciation, enter 15%. For a car that holds its value for a longer period of time (typically high-end vehicles), enter 10%.

Both: Enter as percentages, but without the percent sign.

Security dep and own years:

Security deposit and own years:

Lease: Enter the amount of any security deposit that may be required at the beginning of the lease into the left-hand field. This figure will be used in calculating lost interest earnings when choosing leasing over buying.

Buy: Enter the number of years you plan to own the car for before trading it in on a new car. Typically the longer you hold on to the car, the more buying the car will save over leasing the car. This is because the average annual cost of depreciation decreases the longer you own the car. Plus, if you hold onto the car for longer than the loan term, there will be months when you will have no monthly car loan payments.

Calculated Results
Tap the text for a description of each row result.
CompareLeaseBuy
Payment:

Payment:

Lease column: Based on your entries, this is the calculated amount of your monthly lease payment. This amount will be fixed for the number of years you indicated you would like the scenario played out for.

Buy column: Based on your entries, this is the calculated monthly car loan payment. This amount may change during the number of years you indicated you would like the scenario played out for. If the car is depreciating faster than you are paying off the loan, the payment will increase during the next buy year. If you are paying the car loan off faster than the car is dropping in value, the payment will decrease in the next buy year -- because the excess market value can be used to trade-in on the new car -- thus lowering the loan amount.

Expenses:

Expenses:

Lease column: This is the calculated total of the combined lease expenses for the number of years you indicated you would like the scenario played out for.

Buy column: This is the calculated total of the combined buy expenses for the number of years you indicated you would like the scenario played out for. Note that the only portion of a monthly car loan payment that is an actual expense, is the interest portion of the payment. The other actual expense occurs as the market value of the car drops (depreciates). The specific amount of the depreciation expense cannot be determined until the car is actually sold, traded-in, or scrapped. Therefore all depreciation expenses are merely estimates based on the annual depreciation rate you entered.

Lost interest:

Lost interest:

Lease column: This is the estimated amount of interest earnings you would lose if you chose to lease at the terms you entered instead of buy at the terms you entered -- for the number of years you indicated you wanted to scenario to be played out for. Essentially this measures how much investment interest you could have earned if you invested the cash flow savings from leasing versus buying. Any lost interest from buying is deducted from this amount and the buying lost interest is set to zero.

Buy column: This is the estimated amount of interest earnings you would lose if you chose to buy at the terms you entered instead of lease at the terms you entered -- for the number of years you indicated you wanted to scenario to be played out for. Essentially this measures how much investment interest you could have earned if you invested the cash flow savings from buying versus leasing. Any lost interest from leasing is deducted from this amount and the leasing lost interest is set to zero.

Net cost:

Net cost:

Lease column: This is the total of the leasing expenses and lost interest earnings for the number of years you indicated you would like the scenario played out for.

Buy column: This is the total of the buying expenses and lost interest earnings for the number of years you indicated you would like the scenario played out for.

If you would like to save the current entries to the secure online database, tap or click on the Data tab, select "New Data Record", give the data record a name, then tap or click the Save button. To save changes to previously saved entries, simply tap the Save button. Please select and "Clear" any data records you no longer need.

Related Calculators

automobile lease calculatorcar buying calculatorcar affordability calculator

Help and Tools

Learn

Difference, which is better, and why leasing should always cost more than buying.

Difference Between Lease and Finance

If you're new to the car buying game, the major difference between leasing a car and financing a car is that leasing is paying for only a portion of the car, whereas financing a car is paying for all of the car.

In the case of leasing, you are paying for the drop in the value of the car (depreciation) between the start of the lease and the end of the lease. This means you won't ever build up any equity in the vehicle (equity is the difference between what you could sell the car for and what you owe on the car).

On the other hand, if you take a loan out to purchase a car, you will end paying for the drop in value from the time you purchase the car to the time you sell or scrap the vehicle. In this case, you do have the opportunity to build up equity if you are paying down the car loan faster than the car is depreciating.

Which is Better, Buying or Leasing?

If you're asking "should I lease or buy a car?", the answer depends on your financial situation and on how you intend to use and care for the vehicle.

Buying May Be The Better Choice If ...

You expect to drive more than 15,000 miles per year. This is because a lease usually limits the number of miles you can drive to 10,000 to 15,000 miles per year. If you exceed the mileage limit, you will end up paying a fee (fine) for the excess miles.

You expect to own the car for a long period of time (6-10 years or more). This is because you will eventually pay the car off and no longer have any monthly payments. These monthly payments you no longer have to make can then be used to save up a sizeable down payment for your next auto purchase.

You're concerned about the likelihood of minor damage occurring to the vehicle. If you purchase the car and it gets minor dings, dents, and paint scuffs, you can choose to ignore them. Not so with leasing, as the leasing company will charge you for that damage at the end of the lease.

You want to customize to the vehicle. Customization is not permitted in the case of a lease.

Leasing May Be The Better Choice If ...

You expect to drive the vehicle less than 10,000 miles per year, you are not concerned with the likelihood of minor damage, and you have no desire to customize the vehicle.

You want a lower monthly payment. Because you're only paying for a portion of the car instead of all of it, car lease payments are typically lower than car loan payments.

You want to drive the latest cars with the latest technologies. Because the same lease payment will afford you more car than the same loan payment, leasing will likely afford you to drive higher end or higher tech cars (electric, etc.).

My Personal Preference

Based on my financial situation, auto needs, and a big list of other things I'd rather spend my money on than car depreciation, I will always choose to buy over leasing.

I'm still driving a Chevy Avalanche I purchased new in October of 2001, and have been able to deposit my former, monthly truck payment ($585) into a "Vehicle Purchase, Maintenance, and Repair" savings account since 2005 ($98,280 and counting!).

Leasing Should Always Cost More Than Buying a Car

The reason leasing a car should always be the more expensive alternative, is because if you own the purchased vehicle long enough, you open the door to two money-saving opportunities.

First money-saving opportunity: The longer you own a purchased vehicle, the lower will be the average annual depreciation rate. So if you lease (or buy) a new vehicle every two years (typical lease term), the average annual depreciation expense may run as high as 20% of the purchase price. On the other hand, if you purchase a new vehicle every ten years, the average annual depreciation rate may be less than 10% of the purchase price.

The following chart shows how the average annual depreciation expense percentage drops the longer you own a purchased vehicle (be sure to experiment with your entries into the car buy versus lease calculator to see what difference the years of ownership can make).

$20,000 Automobile at 20% Annual Depreciation
Own
Yrs
Own
Yrs
Years
Owned
Years
Owned
End of Year
Market Value
End of Year
Market Value
End of Year
Market Value
End of Year
Market Value
DeprecDeprecDeprecDepreciationAccum
Deprec
Accum
Deprec
Accum
Deprec
Cumulative
Depreciation
Avg
Ann
Deprec
Avg
Ann
Deprec
Average
Annual
Deprec
Average
Annual
Depreciation
1$16,000$4,000$4,00020.00%
2$12,800$3,200$7,20018.00%
3$10,240$2,560$9,76016.27%
4$8,192$2,048$11,80814.76%
5$6,554$1,638$13,44613.45%
6$5,243$1,311$14,75712.30%
7$4,194$1,049$15,80611.29%
8$3,355$839$16,64510.40%
9$2,684$671$17,3169.62%
10$2,147$537$17,8538.93%

Second money-saving opportunity: If you own a purchased vehicle long enough eventually the auto loan will be paid off -- meaning that for as long as you continue to own the vehicle you will not have a monthly car payment.

However, if you lease a new vehicle at the end of every lease term you will always have a monthly lease payment.

And take a guess as to what you can do with that monthly car payment that you will no longer have to pay out?

That's right; you can be depositing that amount to your savings account each month. In turn, this means that if you keep the vehicle for twice as long as the loan term, you should be able to pay cash for your next vehicle -- thereby avoiding future interest and lease fees altogether.

And what can you do with the future lease or interest fees you will be saving?

Yes, you can either invest in your high interest debt or invest in traditional investments -- either of which will serve to increase how much car you can afford.

Cash Versus Financing or Leasing

When it comes to determining how much car you can afford, cash is king. Why?

Because, since you've already earned the cash you are spending, you can assign the proper value to that denomination of cash. Whereas if you borrow the money to purchase a vehicle, or borrow the value of the vehicle (lease), you have no idea what you will have to do to earn the money needed to repay the value you borrowed -- meaning you won't be able to assign a proper future value to it.

What do I mean by "assigning the proper value" to cash or future value?

Think of it this way. Would $100 a month be more valuable to you if you were earning minimum wage than if you were earning $100 per hour?

Or, would $100 a month mean more to you if you were digging trenches by hand in bitterly cold weather instead of performing a work you loved in a comfortable environment?

Or, does $100 mean as much to Bill Gates (billionaire) as it means to you?

You see, it's not the denomination of cash that determines its ultimate value, it's what you have to do to earn it.

And since you don't have a crystal ball, you have no idea of what you will have to do to earn future denominations of money. Therefore it is absolutely impossible to make wise financial decisions with money you haven't yet earned.

What if you lose your job and find yourself making half as much as you used to? Will you be willing to work twice as many hours to make the monthly loan or lease payments?

What if you discover a dream job that perfectly suits your talents, abilities, and genuine interests, but it would require you to take a cut in pay? Would you still consider the auto purchase or auto lease to have been a wise decision if you can't afford to take the dream job due to these high payment obligations?

You see, paying cash for a car is the only way you can make a car buying decision that will serve your best interests now and in the future.

Could You Afford Your Last Car?

Well, if you don't have the cash needed to purchase a car now, then it's likely you couldn't "afford" the last vehicle you purchased.

The only way to determine what price you can afford to pay for a vehicle is to determine what price range will allow you to set aside the depreciation expense each month. This is an amount that is over, and above any lease or loan payment, being saved to pay cash for your next vehicle -- cash that you can assign a proper value to.

So if you can't afford to pay cash for a car, you can't afford the car. Yes, you may need the car even though you can't afford it. But this only means you will need to work twice as hard to save up enough cash so that you can make a wise financial decision when it comes time to buy your next vehicle.

Adjust Calculator Width:

Move the slider to left and right to adjust the calculator width. Note that the Help and Tools panel will be hidden when the calculator is too wide to fit both on the screen. Moving the slider to the left will bring the instructions and tools panel back into view.

Also note that some calculators will reformat to accommodate the screen size as you make the calculator wider or narrower. If the calculator is narrow, columns of entry rows will be converted to a vertical entry form, whereas a wider calculator will display columns of entry rows, and the entry fields will be smaller in size ... since they will not need to be "thumb friendly".

Show/Hide Popup Keypads:

Select Show or Hide to show or hide the popup keypad icons located next to numeric entry fields. These are generally only needed for mobile devices that don't have decimal points in their numeric keypads. So if you are on a desktop, you may find the calculator to be more user-friendly and less cluttered without them.

Stick/Unstick Tools:

Select Stick or Unstick to stick or unstick the help and tools panel. Selecting "Stick" will keep the panel in view while scrolling the calculator vertically. If you find that annoying, select "Unstick" to keep the panel in a stationary position.

If the tools panel becomes "Unstuck" on its own, try clicking "Unstick" and then "Stick" to re-stick the panel.