Is Leasing a Car Cheaper Than Buying? Run the 3-Year Math
Leasing a car can have a lower monthly payment, but the three-year cost depends on resale value, fees, mileage, and equity. Run the math with a real scenario.
Answer four quick questions to seed a baseline comparison.
Car Buy vs Lease Calculator
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The lower monthly payment is not always the cheaper car decision. Leasing usually compresses the payment because you are paying for use, mileage, and depreciation during the lease term. Buying can cost more upfront, but it may leave you with equity and more flexibility if you keep the car longer.
Enter the lease offer, loan terms, down payment, mileage, fees, and expected resale value. The calculator compares total cost over the horizon you care about so the decision is based on the whole deal, not just the payment.
What this calculator covers
Use these as a quick scope check before you rely on the output.
- •Lease payment and due-at-signing comparison
- •Loan payment, interest, and down-payment modeling
- •Mileage allowance and overage assumptions
- •Resale value and equity at the end of the period
- •Total cost comparison across your planned hold period
Frequently asked questions
When is leasing cheaper than buying?
Leasing can look better when you want a new car every few years, drive predictable mileage, and value a lower monthly payment more than building equity. Buying often improves when you keep the car past the loan term or drive more than a lease allows.
What should I compare besides the monthly payment?
Compare cash due at signing, fees, taxes, financing charges, mileage limits, maintenance, insurance, resale value, and whether you own anything at the end. A lower monthly payment can still lose over the full ownership period.
What are money factor and residual value?
Money factor is the lease financing charge, similar to an interest rate. Residual value is the car's expected value at lease end. Together with the negotiated price, they drive how much depreciation and financing you pay for.
How do mileage limits and wear charges affect lease cost?
Most leases cap annual mileage and charge for extra miles or excess wear at the end. If you drive unpredictably, carry kids or gear, or expect to end the lease early, those charges can erase the apparent monthly-payment savings.
What happens at the end of a lease?
You usually return the car, buy it for the residual value, or start a new lease. The cheapest option depends on the car's market value, mileage, condition, purchase-option fees, and whether you still want the same vehicle.
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