Lease vs Buy Car Calculator
The monthly payments are the wrong things to compare: a lease payment buys the car's depreciation and a loan payment buys some of the car. This puts both roads over the same horizon, values the car you would own at the end using measured depreciation curves, and shows the honest net cost of each. The interesting answer is how close they usually are over the lease term, and how hard that changes the year after it.
What is actually being compared
The horizon is the lease term, so both roads are measured over the same months. The lease side is simple: everything you paid, nothing you own. The buy side pays more per month but ends the horizon holding something: the car's market value (from the same measured depreciation curves as our car depreciation calculator) minus whatever is still owed on the loan. Subtracting that equity is what makes the comparison honest, and skipping it is what makes every lease-versus-buy argument at a dealership go in circles.
Worked example, and the near tie that surprises people
A $40,000 average vehicle. Lease: $2,000 due at signing, $450 a month for 36 months. Buy: $4,000 down at 7% APR over 60 months, a payment of $712.84.
Over the 36 months the lease costs $18,200 flat. The buyer pays $29,662 in but ends holding a car worth about $27,294 with $15,921 still owed: $11,373 of equity, for a net cost of $18,290. The two roads land $90 apart over three full years. That is not a coincidence: a lease payment is depreciation pricing, and the market prices depreciation efficiently.
The decision is really about year four
If the lease term is a near tie, what decides it is what happens next. The leaser hands back the keys and starts again, at the same monthly forever. The buyer keeps a car that now costs nothing but running expenses, and every additional year spreads the purchase over more miles. Run the example out eight years and buying works out to roughly $296 a month all-in against over $505 a month for serial leasing: a gap of about $20,000, produced entirely by the years after the comparison most people stop at. The result above prices this keep-it row for your own numbers, because it is usually the line that settles the argument.
Where each side honestly wins
Leasing earns its keep when you would replace the car every two or three years regardless, when a business can deduct the payments, or when the car is a fast depreciator whose residual risk is better left with the lessor; recent EVs, which shed 57 percent in five years on the measured data, are the textbook case, and subsidized EV lease deals often pass through tax credits a buyer might not get. Buying wins on mileage (lease caps commonly sit at 10,000 to 12,000 a year, with per-mile charges beyond), on customization, on the freedom to sell whenever, and overwhelmingly on keeping the car past the loan. Watch one number on the buy side: if the equity at the horizon shows negative, you are underwater, which is what little-down long-term loans do quietly, and the car loan calculator shows the payment mechanics behind it.
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Frequently asked questions
Is it cheaper to lease or buy a car?
Over the lease term itself, usually closer than either camp admits: on our worked $40,000 example the two land within about a hundred dollars of each other over three years, because lease pricing is depreciation pricing and the market prices it efficiently. The real difference starts the day the lease term ends: the buyer owns a car and keeps driving it while paying nothing, and the leaser starts another lease. Keeping a bought car past the loan is where buying wins, and it wins big.
Why can't I just compare the monthly payments?
Because they buy different things. A $450 lease payment purchases three years of the car's falling value and hands the car back. A $713 loan payment purchases the same depreciation plus a growing slice of ownership: on the example, about $11,400 of equity by month 36. Comparing $450 to $713 without the equity is the single most common way this decision gets miscounted.
What does a lease payment actually pay for?
Depreciation with a finance charge. The lessor projects the car's residual value at term end, and your payments cover the drop from the sale price to that residual, plus interest (the money factor) and fees. That is why fast-depreciating cars lease expensively at the same sticker price, and why a lease on a strong-residual truck can look surprisingly cheap.
When does leasing genuinely make sense?
When you would replace the car every two or three years anyway, when the car is a fast depreciator whose residual risk you would rather leave with the lessor (recent EVs being the sharp example), when a business can deduct the payments, or when a subsidized lease deal prices the residual optimistically in your favor. Leasing is not a trick; it is paying a specialist to own the depreciation.
When does buying win?
Almost whenever you keep the car past the loan. Run the example out eight years and buying costs roughly $300 a month all-in while serial leasing runs over $500, a gap of tens of thousands over a driving lifetime. The cheapest car most people will ever own is the paid-off one in their driveway, which is also the answer to when to stop rerunning this calculator.
What about mileage limits and wear charges?
Leases price a mileage cap, commonly 10,000 to 12,000 a year, and charge per mile beyond it, often 25 cents or more, plus charges for wear beyond normal. Drive far and the cap quietly reprices the whole comparison, which is one reason high-mileage drivers usually belong on the buy side. Enter your real expectations, and if you routinely exceed caps, weight the verdict toward buying.
What does being underwater on a car loan mean?
Owing more than the car is worth, which happens when depreciation outruns a slow-starting loan, especially with little down and a long term. This calculator shows your equity at the horizon; if it is negative, that is the underwater stretch, and it is the reason long loans with small down payments make the buy side look better monthly and worse in truth.
Where do the car values in this comparison come from?
The same measured curves as our car depreciation calculator: iSeeCars' 2026 study totals by segment, with the year-by-year path a stated convention solved to land on the measured five-year figures. The two pages share the curve deliberately, so the value this page assigns your bought car at year three is exactly what the depreciation page would tell you it is worth.