Buy vs Lease Calculator
Compare the total cost of buying vs leasing a vehicle over the lease term. Includes financing, sales tax, insurance, maintenance, depreciation (resale value), and excess mileage fees.
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All calculations happen in your browser. No vehicle or financial data is sent to any server.
Default set to 12,000/year (common lease allowance).
Assumptions:
- Sales tax for buying is applied to the full vehicle price upfront.
- Sales tax for leasing is applied to the down payment plus total lease payments. Actual lease taxation varies by state—some tax only monthly payments, others tax the capitalized cost upfront, and some states exempt leases entirely.
- Depreciation uses an exponential decay model based on the annual rate provided.
- Insurance and maintenance costs are assumed constant over the comparison period.
Table of Contents
What is a Buy vs Lease Calculator?
A buy vs lease calculator compares the estimated total cost of buying a vehicle versus leasing it over the same time horizon (typically the lease term). It goes beyond “monthly payment” and factors in resale value (depreciation), insurance, maintenance, taxes, and lease-specific fees.
The goal is to help you make a decision based on total cost and financial trade-offs—like equity (if you buy) versus flexibility (if you lease).
How it Works
- Normalize the time horizon: buying is evaluated over the lease term (e.g., 36 months) so the comparison is apples-to-apples.
- Estimate buy costs: down payment, taxes, loan payments (and remaining balance), insurance, and maintenance.
- Estimate resale value: depreciation is used to estimate what the vehicle could sell for at the end of the horizon.
- Estimate lease costs: lease down payment, lease payments, taxes, insurance, maintenance, and mileage penalties (if applicable).
- Compute break-even: compare the cumulative lease cost to the buy net cost “if sold” at each month.
Key Inputs Explained
Depreciation rate
This drives the estimated resale value. A higher depreciation rate lowers resale value and can make buying look worse. If you’re unsure, test a “low depreciation” and “high depreciation” scenario to see sensitivity.
Mileage allowance and excess mileage fee
Leases often include a mileage limit. Driving above it can add meaningful costs. Use your realistic annual mileage estimate—high-mileage drivers often find leasing becomes expensive.
Residual value (lease buyout price)
This is the purchase option price at lease end. If you plan to buy the vehicle, turning on the buyout option shows how that changes the lease total cost.
Insurance and maintenance
These often differ between leasing and owning (leases can require higher coverage). Including them prevents underestimating true costs.
Understanding the Results
- Buy net cost: cash paid minus estimated resale value (and accounting for any remaining loan balance at the end of the horizon).
- Lease net cost: total lease payments + fees + insurance/maintenance (+ mileage penalties). If buyout is enabled, it includes residual + tax as well.
- Equity: buying can produce equity (resale value minus remaining loan balance). Leasing typically produces no equity unless you buy out the lease.
- Recommendation: based on which option has the lower modeled total cost given your inputs.
Break-even Timeline
The break-even month is the earliest month where the buy net cost (if you sold at that month) becomes less than or equal to the cumulative lease cost. If it never happens during the modeled horizon, leasing remains cheaper under your assumptions.
If your break-even is very early or flips easily when you adjust mileage/depreciation, treat it as a signal that the decision is sensitive and worth validating with more accurate assumptions.
Frequently Asked Questions
Yes. Leasing can be cheaper over short horizons, especially if depreciation is high, you drive within the mileage allowance, and you value a lower monthly outflow. Buying tends to improve as the horizon gets longer and resale value matters more.
If you don’t know, run a low and high scenario (for example 10–25% annual depreciation). You can also sanity-check resale assumptions by looking at used prices for similar vehicles at the same age and mileage.
They can. A $0.25/mile penalty at 6,000 excess miles per year is $1,500/year. Over a 3-year lease that’s $4,500—often enough to change the recommendation.
Enable it if you expect to buy the vehicle at the end of the lease. If you plan to return it, leave it off—otherwise you’ll overstate the lease cost.
It depends on your location. Some states tax monthly payments, others tax the capitalized cost upfront. This tool uses a simplified approach and includes a note in the assumptions section—check your local rules for precision.
Not explicitly. If you want to approximate fees, you can add them into the purchase price or adjust down payments accordingly to reflect your expected out-of-pocket costs.