Car Buy vs Lease Calculator
Compare the total cost of buying versus leasing a car over any term, including depreciation, financing, and residual value.
How the buy vs lease comparison works
Buying and leasing have very different cash-flow shapes, which is what makes them hard to compare at a glance. Buying front-loads cost with a down payment and typically higher monthly payments, but builds equity in an asset you keep (or can sell) at the end. Leasing spreads a lower monthly payment over a fixed term but leaves you with nothing at the end unless you buy out the residual value — this calculator puts both onto a common net-cost basis over your chosen ownership horizon so they can be compared directly.
Because buying's relative advantage typically grows the longer you keep the vehicle, the ownership horizon you enter matters as much as the loan and lease terms themselves. For financing an auto loan on its own, or comparing it against a different loan option entirely, see the Loan Comparison calculator. If you're also weighing an electric vehicle against a petrol equivalent as part of this decision, see the EV vs Petrol Cost calculator.
Frequently asked questions
- Why does buying look worse right away but better later?
- The down payment and higher monthly payment front-load buying's cost, but you keep building equity in an asset. Leasing has lower cash outflow up front but you walk away with nothing — over enough years, retained equity typically overtakes the cumulative gap.
- What if my planned ownership is longer than the lease term?
- The model assumes you re-lease at the same monthly payment for as long as you keep leasing — it doesn't get free after the original lease term ends.
- What mileage allowance does this assume?
- The standard 12,000 miles/year — the excess mileage charge only applies above that, not from mile one.
- How is the total cost of buying calculated?
- Buying's total cost combines the down payment, every loan payment over the term (principal plus interest), minus the vehicle's residual value at your ownership horizon (based on your expected appreciation/depreciation rate), plus the opportunity cost of the cash tied up in the down payment.
- What costs are included in a lease?
- The lease side totals every monthly lease payment over your ownership horizon (re-leasing at the same payment if you keep leasing beyond the original term), plus any excess mileage charges if your annual mileage exceeds the standard 12,000-mile allowance.
- What is residual value in a lease?
- Residual value is the vehicle's guaranteed value at the end of the lease term, set by the leasing company as a percentage of the original price — it's effectively what the leasing company is betting the car will still be worth, and it directly determines how much of the vehicle's value you're paying for during the lease.
- Is it always cheaper to buy than lease?
- No — it depends heavily on how long you plan to keep the vehicle, the loan and lease terms offered, and how fast the vehicle depreciates. Buying tends to win over longer ownership horizons since you build equity in an asset, while leasing can have lower short-term cash outflow — run your own numbers rather than assuming either is universally better.
- What happens at the end of a lease term?
- Typically you return the vehicle and either walk away, lease a new vehicle, or purchase the current one at its residual value. This calculator assumes you keep re-leasing at the same payment for as long as your ownership horizon continues, rather than the lease becoming free after the original term.