Calculate the true total cost of each option — not just the monthly payment
Free Auto Finance Tool
Lease vs Buy Car Calculator
Most calculators only compare monthly payments — that's misleading. This tool compares the true total cost of leasing vs buying, including depreciation, fees, taxes, and what you could earn investing the difference.
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Leasing details
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Leasing
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Asset value at end$0
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True cost over time — lease vs buy
This chart shows cumulative net cost for each option over the full loan term. Buying typically crosses into savings territory once the car is paid off and you own an appreciating-relative asset.
Leasing (perpetual)
Buying (net of asset value)
Break-even point
What this analysis considered
When does each option make sense?
✦ Leasing is better if you…
Drive fewer miles than the allowance
Want a new car every 2–3 years
Prioritize lower monthly payments
Use it as a business vehicle (tax deductions)
Don't want to worry about resale value
✦ Buying is better if you…
Drive more miles than the lease allows
Plan to keep the car 5+ years
Want to build equity in an asset
Want to customize or modify the car
Have variable income (no fixed payment forever)
Disclaimer: This calculator provides estimates for educational purposes only. Actual costs vary based on your credit score, specific dealer terms, insurance rates, maintenance costs, and local taxes. Consult a financial advisor before making a vehicle purchase decision.
Understanding leasing vs buying
The single biggest mistake people make when comparing leasing and buying is looking only at the monthly payment. A $350/month lease and a $550/month car loan look very different — until you account for the fact that after 60 months of loan payments, you own a car worth $15,000. After 36 months of lease payments, you own nothing and must start over.
The true comparison requires calculating total money out of pocket for each option over the same time period, then subtracting the residual asset value you're left with. This calculator does exactly that.
Opportunity cost adds another layer: the down payment on a purchased vehicle is money that could have been invested. At a 7% annual return, $5,000 invested for 5 years grows to approximately $7,013. This calculator factors in what you give up by putting cash toward a car instead of investing it.
Frequently asked questions
Is it cheaper to lease or buy a car? ▼
It depends on how long you keep the vehicle. Leasing almost always has lower monthly payments, but buying almost always wins over a long time horizon (5+ years) because you eventually own an asset with residual value. If you lease in perpetuity, you'll always have a car payment — buying means eventually owning the car free and clear. Use the calculator above with your real numbers to find out which wins in your specific situation.
What are the hidden costs of leasing a car? ▼
The most common hidden lease costs include: (1) Acquisition fee — typically $500–$1,000 charged by the leasing company upfront. (2) Disposition fee — $300–$500 charged at lease end if you don't buy the car or lease another from the same brand. (3) Excess mileage charges — typically $0.15–$0.30 per mile over the contracted limit. (4) Excess wear and tear fees — scratches, dents, and worn tires can result in charges at return. (5) Early termination penalties — breaking a lease early can cost thousands.
What credit score do you need to lease a car? ▼
Most lease approvals require a credit score of 700 or higher for standard rates. Scores of 720+ typically qualify for the best "Tier 1" lease rates. Scores between 620–699 may still be approved but often at significantly higher money factors (the lease equivalent of an interest rate). Below 620, most mainstream lenders won't approve a lease. Your credit score affects the money factor (cost of borrowing) but not the residual value used in the lease calculation.
What is a money factor in a car lease? ▼
The money factor is the lease equivalent of an interest rate. To convert it to an approximate APR, multiply the money factor by 2,400. So a money factor of 0.00125 is equivalent to roughly 3% APR. Dealers are not required to disclose the money factor, but you can ask for it directly. Always compare the money factor to current market rates to ensure you're not overpaying for the financing component of your lease.
Is leasing a car good for business owners? ▼
Often yes — self-employed individuals and business owners can typically deduct the business-use portion of lease payments as a business expense, whereas with a purchased vehicle you must depreciate it over several years (though Section 179 expensing may apply). However, tax law is complex and individual circumstances vary significantly. Consult a CPA before making a vehicle decision based on tax implications.
What happens at the end of a car lease? ▼
At lease end you have three options: (1) Return the vehicle — pay any disposition fee and excess mileage/wear charges, then walk away. (2) Buy the vehicle — purchase it at the pre-agreed residual value, which may or may not be a good deal depending on current market values. (3) Lease a new vehicle — many brands waive the disposition fee if you lease another vehicle from them. Comparing the residual price to the car's actual market value (via KBB or Edmunds) before deciding whether to buy is essential.
How much should I put down on a car lease? ▼
Financial advisors generally recommend putting as little down as possible on a lease — ideally $0. This is counterintuitive but important: unlike a purchase, if the leased car is stolen or totaled in a collision, the insurance payout goes to the leasing company. Any down payment you made is typically not refunded. Instead of a large cap cost reduction, ask the dealer to roll fees into the monthly payment so your money stays accessible to you.
Used Car Buyer's Guide
Whether you decide to lease or buy, purchasing a used vehicle can save you thousands compared to new — but only if you know what to look for. Here's a condensed guide to buying used with confidence.
Pre-purchase inspection checklist
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Run a VIN reportCarfax or AutoCheck reveals accident history, title issues, and odometer rollbacks before you ever see the car.
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Independent mechanic inspectionSpend $100–$150 for a pre-purchase inspection (PPI) at a shop you choose — not the seller's.
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Check service recordsAsk for maintenance records. Regular oil changes and documented service history signal a well-cared-for vehicle.
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Inspect the paint carefullyMismatched paint panels or overspray on trim can indicate prior bodywork or accident repair.
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Test drive on the highwayShort test drives miss issues. Get it up to highway speed to check for vibrations, pulling, or transmission hesitation.
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Look for fluid leaksPark on a clean surface for 10 minutes. Any wet spots underneath — oil, coolant, or brake fluid — are red flags.
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Test all electronicsAC, heat, windows, infotainment, backup camera — repairs on modern electronics are expensive. Test everything.
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Check tire wear patternUneven wear across a tire indicates alignment or suspension problems that may cost $500–$1,500 to fix.
Red flags — walk away if you see these
⚠️ Seller won't allow a PPI or rushes you to decide today
⚠️ Salvage, rebuilt, or flood title on the Carfax report
⚠️ VIN on dash doesn't match the VIN on the door jamb sticker
⚠️ Rust on the frame, subframe, or brake lines
⚠️ Check engine light is on — or was recently cleared
⚠️ Price is dramatically below market (too good to be true)
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How to negotiate a car deal — 7 proven tactics
Whether buying or leasing, negotiation can save you $1,000–$4,000. Most buyers negotiate the wrong thing. Here's how to do it right.
1
Get pre-approved financing before you step foot in a dealershipA pre-approval from your bank or credit union gives you a real rate to compare against dealer financing — and removes the dealer's most powerful lever. Sites like LendingTree, Capital One Auto Finance, or your local credit union typically offer the best rates.
2
Negotiate the out-the-door (OTD) price, not the monthly paymentDealers love to focus on monthly payments because they can hide extra costs by extending the loan term. Always negotiate total price first. The monthly payment is just math once the price is agreed.
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Know the market value before you goCheck Edmunds True Market Value, KBB Fair Purchase Price, and recent sold listings on CarGurus. Walk in knowing exactly what the car is worth — dealers expect informed buyers and will negotiate more honestly with them.
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Never reveal your trade-in earlyKeep the trade-in negotiation completely separate from the new car purchase. Dealers use trade-in allowances as a shell game. Sell to CarMax or Carvana first to get a real offer and use it as your baseline.
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Shop multiple dealers — in writingEmail 3–5 dealers with the same vehicle request and ask for their best OTD price by end of day. Dealers compete hard via email. This alone can save $500–$2,000 without setting foot in a showroom.
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Decline the F&I add-onsThe finance office (F&I) is where dealers make a second profit center. Extended warranties, gap insurance, paint protection, and tire packages are almost always overpriced. Decline everything by default — you can buy extended warranties elsewhere for less.
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Be willing to walk away — and mean itThe single most powerful negotiating tool is genuine willingness to leave. If a dealer won't meet your price, thank them and walk toward the door. Most will call you back within 24 hours with a better number.
Trusted car research resources
These are the most reliable sites for pricing data, vehicle history, and expert reviews — bookmark them before your next car search.