Key Takeaways
- Leasing typically has lower monthly payments but you don't own the car
- Buying costs more monthly but you build equity and own the vehicle
- Consider how long you plan to keep the car before deciding
- Factor in insurance, maintenance, and potential mileage fees for leases
- If you drive more than 12,000-15,000 miles per year, buying is often better
About the Lease vs Buy Calculator
The Lease vs Buy Calculator is a comprehensive tool designed to help you compare the total cost of leasing versus buying a vehicle. This free calculator provides accurate results to help you make an informed decision about your next car purchase.
How to Use This Calculator
Enter Vehicle Information
Input the car's purchase price and your planned down payment amount.
Enter Loan Details
Provide the interest rate and loan term (in months) for financing the purchase.
Enter Lease Details
Input the monthly lease payment and lease term from the dealer's offer.
Compare Results
Click Calculate to see a side-by-side comparison of total costs and our recommendation.
Understanding Leasing vs Buying
When deciding between leasing and buying a car, it's important to understand the fundamental differences. Leasing is essentially a long-term rental where you pay for the vehicle's depreciation during the lease term, while buying means you're financing the full purchase price and will own the car outright once the loan is paid off.
Advantages of Leasing
- Lower monthly payments compared to buying
- Drive a new car every few years
- Warranty coverage for most repairs
- No concerns about selling the vehicle later
- Lower down payment requirements
Advantages of Buying
- Build equity and own the vehicle
- No mileage restrictions
- Freedom to modify the vehicle
- Lower long-term costs if you keep the car
- No lease-end fees or penalties
Key Factors to Consider
Beyond the raw numbers, consider these important factors when making your decision:
- Annual Mileage: Leases typically include 10,000-15,000 miles per year. Excess mileage fees can add up quickly.
- Vehicle Condition: Leased vehicles must be returned in good condition. Wear and tear charges can be costly.
- Length of Ownership: If you plan to keep a car for 7+ years, buying is usually more economical.
- Tax Implications: In some states, you only pay sales tax on lease payments, not the full vehicle value.
Frequently Asked Questions
In the short term, leasing usually has lower monthly payments. However, if you plan to keep a vehicle for many years, buying is typically more economical since you'll own the car outright after paying off the loan.
At lease end, you have three options: return the vehicle, purchase it at the predetermined residual value, or lease a new vehicle. Be prepared for potential fees for excess mileage or wear and tear.
Many experts recommend putting as little down as possible on a lease (ideally just the first month's payment and fees). Unlike buying, a down payment on a lease doesn't reduce your total cost - it just prepays some of your monthly payments.
Yes! The capitalized cost (essentially the sale price used to calculate your lease) is negotiable, just like when buying. You can also negotiate the money factor (interest rate) and sometimes the residual value.
This calculator provides accurate estimates based on standard automotive financing formulas. However, actual costs may vary based on taxes, fees, insurance differences, and other factors not included in this basic comparison.
Additional Resources
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