A Lease vs Buy Calculator helps you compare the financial impact of leasing or buying an asset, usually a car or equipment. By entering purchase price, loan terms, lease payments, interest rates, taxes, and expected resale value, you can find out which option costs less over time.
Lease vs Buy Calculator
Make smart financial decisions with our comprehensive calculator. Compare lease and purchase options to find the best deal for your budget and driving needs.
Vehicle Finance Calculator
Comparison Results
Purchase Option
Lease Option
Recommendation
Monthly Payment Comparison
Total Cost Breakdown
Detailed Cost Breakdown
| Cost Component | Purchase | Lease | Difference |
|---|
Lease vs Buy Theory & Guide
Understanding the Basics
Leasing: You pay for the vehicle’s depreciation during the lease term, plus interest and fees. At the end, you return the car or can purchase it for the residual value.
Buying: You finance the entire purchase price minus down payment and trade-in. You own the vehicle and can sell it anytime.
Key Financial Terms
Capitalized Cost: The negotiated price of the vehicle for leasing
Residual Value: Estimated value at lease end (higher = lower payments)
Money Factor: Lease interest rate (divide APR by 2400)
Cap Cost Reduction: Upfront payment to reduce monthly lease payment
Acquisition Fee: Administrative fee charged by leasing company
Leasing Pros & Cons
Pros:
- • Lower monthly payments
- • Always drive newer cars
- • Warranty coverage
- • No depreciation risk
- • Tax advantages for business
Cons:
- • Mileage restrictions
- • No ownership/equity
- • Wear and tear charges
- • Continuous payments
- • Early termination fees
Buying Pros & Cons
Pros:
- • Build equity/ownership
- • No mileage limits
- • Modify as desired
- • Can sell anytime
- • Eventually no payments
Cons:
- • Higher monthly payments
- • Depreciation risk
- • Maintenance after warranty
- • Large upfront costs
- • Technology becomes outdated
Key Decision Factors
Driving Habits
Consider your annual mileage. Lease if you drive less than 15,000 miles/year. Buy if you drive more or take frequent road trips.
Financial Situation
Lease offers lower monthly payments but continuous costs. Buy requires higher payments but builds equity and eventually eliminates payments.
Technology Preference
Lease if you want the latest features and technology. Buy if you’re comfortable keeping a car for many years.
How We Calculate
Lease Payment Formula:
Monthly Payment = (Depreciation + Interest + Tax)
Depreciation = (Cap Cost – Residual) / Term
Interest = (Cap Cost + Residual) × Money Factor
Buy Payment Formula:
Monthly Payment = P × [r(1+r)^n] / [(1+r)^n-1]
P = Principal (loan amount)
r = Monthly interest rate
n = Number of payments
FAQ Lease vs Buy Calculator
Is leasing always cheaper than buying?
Not always. Leasing can have lower monthly payments, but buying may be cheaper in the long run, especially if you keep the asset for many years.
Which is better: leasing or buying?
It depends on your situation. Leasing is better if you want lower monthly payments, flexibility, and newer models. Buying is better if you want long-term savings, ownership, and no mileage restrictions.