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Lease vs Buy Car Calculator

Deciding whether to lease or buy a car can be challenging because there are so many factors to consider, ranging from financial implications and how either can affect your budget to individual preferences and driving needs. 

Our lease vs. buy calculator can help you determine whether it’s a better option to lease or purchase a vehicle based on factors related to purchasing a car, such as getting a loan, or depreciation and leasing, such as monthly payments. 

Should I lease or buy a car?

Whether you should buy a car depends on factors like the vehicle itself, your preferences and the financial implications. The most important factor is your budget. You can build a better budget by reviewing your monthly cash flow, including bills and debts, to determine which option aligns best with your financial goals and affordability. 

Keep in mind that some consider it cheaper to purchase a car they’ll own for many years, but cars depreciate in value when you drive off the lot. On the other hand, leasing allows you to drive newer cars that often require fewer maintenance costs, but don’t allow you to build equity. To determine whether you should lease or buy a car, use our calculator and continue reading our guide below.

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Lease vs. Buy Car Calculator

Use our lease vs. buy a car calculator to help determine if leasing or purchasing a vehicle makes financial sense. Since the right choice can significantly impact your finances and lifestyle, determining how much each will cost you on a monthly basis can help. 

Our lease vs. buy calculator can help you assess the financial impact of each option, allowing you to make a better decision for your unique circumstances.

How We Can Help You Save for a Car

Our lease vs. purchase calculator can help you determine whether you should purchase or lease a car. However, it’s worth it to take a deep dive into your financial situation to determine which one is most affordable in the short- and long-term.

When you're ready, visit our Auto Buying Center and take advantage of our trusted partners that can help find the perfect new or used vehicle for you. They can help negotiate prices, provide recommendations and even deliver the vehicle to you!

Frequently Asked Questions

Using the leasing vs. buying car calculator is simple. Simply enter the numbers (or an estimate of each) and we’ll help you calculate whether it’s more affordable to lease or buy a car. 

Purchase: Here, you’ll enter the information for purchasing a car, including any loan details if you’re not purchasing it in cash. 

  • Purchase price: The purchase price is the total amount you pay for the car, including fees, taxes and associated charges. 
  • Down payment: The down payment is the amount you pay out-of-pocket when taking out a loan. 
  • Loan term (months): Your term length is the number of months you have to repay the car loan
  • Interest rate: The interest rate is a percentage and represents the additional amount you pay on top of the principal loan amount. You can typically find this information on a car dealership’s website. 

Purchase assumptions: Purchase assumptions are the various factors and conditions assumed, which you may or may not know when using this calculator unless you’re looking at a specific car. 

  • Sales tax rate: The sales tax rate varies depending on where you purchase the car and are determined at the state, county, or city level. 
  • Vehicle age (years): The vehicle’s age can greatly affect the overall price. Typically, the older a car is, the less it’s worth. 
  • Cash rebate: A cash rebate is an incentive offered by purchasers that are given back after you purchase the vehicle, reducing the overall price of the car or providing a cash refund.
  • Other upfront costs: Other upfront costs may include registration and documentation, dealer fees, maintenance plans and car insurance

Lease: Providing us with lease information will allow our lease vs. finance car calculator to determine whether leasing or purchasing a vehicle is more affordable. 

  • Monthly payment: The monthly payment is how much you owe to repay the loan, including principal and interest. 
  • Down payment: The down payment is made at the start of the lease term and can reduce the cost while lowering your monthly payments. 
  • Lease term (months): The standard lease length ranges from 2 to 4 years, with 3 years being the most common. However, lease terms can vary by preferences, offers and specific models. 
  • Security deposit: The security deposit is a refundable amount paid that protects the dealership in case you fail to take proper care of the vehicle. 
  • Cash rebate: A cash rebate for leasing a car is an offer that allows you to encourage leasing certain models and can help reduce the overall cost of the lease.

Taxes & Depreciation: Both taxes and depreciation can impact the decision to buy or lease a car, determining which is the better investment for you.

  • Your state & federal tax rate: Your tax rates can help us understand how much you pay in income taxes. 
  • Future depreciation: Depreciation refers to the decline in value a car experiences as soon as you drive it off the lot. The more depreciation, the less your car is worth. When you lease a car, you don’t own it so you’re not risking depreciation. 
  • Your savings interest rate: Knowing your savings rate can affect the cost of your financial decisions, such as whether to buy or lease a car.

The main difference between buying and leasing a car is ownership. When you purchase a car, you own it and it becomes one of your assets. With leasing, you’re essentially renting it for a specified period of time. 

Both buying and leasing have monthly payments if you use a loan to purchase your vehicle. However, you typically have higher monthly payments when buying a car because you’re paying off the full purchase price. With leasing, your monthly payments are lower since you’re only paying for the vehicle’s depreciation and associated leasing costs. 

When you buy a car and own it, you’re responsible for all repairs and regular maintenance. On the other hand, leasing includes all warranty coverage, including routine maintenance. 

To determine whether leasing or buying a car is the best option for you, you should determine if you want to own a car. Owning your car means eventually not having to make monthly payments because you’ll eventually own it once the loan is paid off. On the other hand, if you lease a car, you’ll be responsible for making monthly payments that don’t build equity.

Buying a car comes with many benefits. Eventually, after paying off the loan, you’ll own the vehicle, which means having a significant investment. Other benefits of buying a car include the following:

  • Ability to build equity: When you own your car, you can build equity by making regular monthly payments on your loan. Then, the value of your car is an asset you can sell or trade in. 
  • Customization: Buying a car means owning it, allowing you to customize it any way you like. 
  • No mileage restrictions: When you purchase a car, there’s no limit on how often you can drive it. 
  • Lower long-term cost: Buying a car offers long-term savings even though the upfront costs are higher than leasing because you eventually own the car once it’s paid off. 

If you decide to purchase a vehicle, you should consider whether purchasing a new vs. used car is more financially feasible. You can use our New or Used Car Calculator to help you make the right decision.

Pros and cons of buying a car

Of course, buying a car isn’t the best option for everyone. Potential drawbacks of buying a car include the following:

  • Higher upfront costs: Buying a car comes with higher upfront costs because you’ll need to pay a percentage of the purchase price as a down payment on the loan. 
  • Higher monthly payments: In addition to higher upfront costs, buying a car typically comes with higher monthly payments because you’ll pay the entire cost of the purchase price. 
  • Depreciation: Car value decreases as soon as you drive it off the lot. The older the car, the less valuable it is. 
  • Maintenance and repair costs: When you buy a car, you’re responsible for all maintenance and repair costs. 

If you’re considering buying a car, use our Vehicle Payments Calculator to determine how much you’ll pay monthly.

Leasing a car is a better option for some individuals because they don’t have to worry about hefty down payments or monthly payments. The benefits of leasing a car include the following:

  • Lower monthly payments: Leasing a vehicle comes with lower monthly payments than buying one because you only have to pay toward the depreciation and leasing costs. 
  • Lower upfront costs: Leasing also typically comes with lower upfront costs and doesn’t require a down payment. 
  • Ability to drive a newer vehicle: When you lease a vehicle, you can drive a newer one because you don’t have to pay the purchase price, making it more affordable to drive a new vehicle. 
  • Flexibility: Leasing terms are flexible, and you can even modify the lease of your lease, mileage limit and other terms to suit your needs.
  • Limited maintenance and repair costs: The warranty covers most maintenance and repair costs when you lease a car.

Pros and cons of leasing a car

Again, leasing or buying a car are both great options, but whether one is better for you largely depends on your preferences. A few of the cons of leasing a car include the following:

  • Inability to build equity: When you lease a vehicle, you don’t own it, so you can’t build equity as you make payments. 
  • Limited customization: Since you never own a leased car, you won’t be able to make any modifications. 
  • Mileage restrictions: Leases may come with mileage restrictions that prevent you from driving them too frequently.
  • Potential fees and charges: If you exceed your mileage restrictions, you may face hefty fees when your lease ends.

Have more questions?

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