Lease vs buy calculator
Over 72 months, buying a $42,000 sedan with a 60-month loan costs $36,320 once you count the car you still own, against $45,088 for leasing at $529 a month: buying saves $8,768.
How the calculator works
For each month of your horizon the calculator adds up what you have paid under each option.
- Leasing: the amount due at signing and the monthly payments, repeated for a new lease each time one ends.
- Buying: the down payment, the sales tax and the loan payments. At the end, the car’s estimated value is subtracted and any loan balance still owed is added.
The result is the net cost of each option over the horizon, and the catch names the month from which buying stays cheaper.
Calculated by AutoCalca with the same engine that runs the calculator above and the worked example below.
Worked example
The calculator above opens on this case: $42,000 sedan: $529/month lease with $3,500 due at signing vs a 60-month loan, kept six years.
What goes in
- Car price
- $42,000
- Sales tax
- 6 %
- Down payment if you buy
- $5,000
- Loan APR
- 6.35 %
- Loan term
- 60 months
- Lease payment
- $529
- Due at lease signing
- $3,500
- Lease term
- 36 months
- Compare over
- 72 months
What comes out
- Buying saves
- $8,768
- Leasing costs
- $45,088
- Buying costs (after the car’s value)
- $36,320
- Paid out when buying
- $51,229
- Car’s value at the end
- $14,908
- Loan still owed
- $0.00
- Loan payment
- $770.48/mo
The catch in this case: Over 72 months, buying comes out $8,768 cheaper, counting the car you own at the end. Leasing is cheaper up to month 37; from then on buying stays cheaper.
What to know in the US
In the US most leases run 24 to 39 months, and the comparison changes completely with how long you keep a car. Leasing wins for drivers who want a new car every three years and stay within the mileage allowance; buying wins the longer you keep the car after the loan is paid off.
The calculator assumes you lease back-to-back at the same payment for the whole horizon. New-lease payments tend to rise over time, so a long horizon slightly flatters leasing.
Questions people ask
Is it better to lease or buy a car?
It depends on how long you keep the car and how much you drive. Over three years leasing is often competitive; over six or more, buying is usually cheaper because the car keeps its remaining value.
Why does the calculator subtract the car’s value?
When you buy, you own an asset at the end. Its resale value is money you get back, so the net cost of buying is what you paid minus what the car is worth.
What depreciation does it assume?
A typical path of about 20 % in the first year and 15 % a year after, unless you enter your own rates under More options.
Sources
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