Car Lease vs. Buy Calculator
Compare the financial implications of leasing versus buying a vehicle
Buy Options
Lease Options
Operating Costs
Buy Option Results
Lease Option Results
Monthly Cost Comparison
Cumulative Cost Comparison
Summary
Based on your inputs, over 7 years:
Key Advantages of Buying:
- No mileage restrictions
- Asset ownership at end of loan
- Ability to customize vehicle
- Lower long-term costs (typically)
- No ongoing payments after loan is paid off
Key Advantages of Leasing:
- Lower monthly payments
- Lower upfront costs
- Always driving a newer car
- Warranty typically covers entire lease period
- Lower maintenance and repair costs
NRI Consideration: If you're planning to eventually return to India, a short-term lease might be preferable despite potentially higher costs, to avoid having to sell a car or ship it internationally.
Understanding the Car Lease vs. Buy Decision
Deciding whether to lease or buy a car is one of the most significant transportation choices you'll make. Both options have distinct financial, practical, and lifestyle implications that vary based on your personal circumstances, driving habits, and financial goals. Leasing offers lower monthly payments and minimal maintenance worries, while buying builds equity and provides unlimited mileage freedom. The right choice depends entirely on your situation.
Our Car Lease vs. Buy Calculator helps you cut through the confusion by comparing the true total cost of both scenarios over your desired ownership period. Just enter your car price (or monthly lease payment), down payment, loan term, depreciation rate, insurance costs, and expected annual mileage, and the calculator will instantly show you which option saves more money and by how much. You'll get a comprehensive financial picture to support this important decision.
How to Use the Car Lease vs. Buy Calculator
Enter your specific car details and preferences to get your complete financial comparison:
Step 1: Enter Car Purchase Price (or Lease Payment)
For buying, input the price of the car you're considering (e.g., $25,000). For leasing, enter the monthly lease payment (e.g., $350/month). These are the baseline costs for each scenario.
Step 2: Specify Down Payment and Loan Terms
Provide your down payment amount and loan term in years (typically 3-7 years). If leasing, enter the lease down payment and lease length. These determine your monthly payment obligations.
Step 3: Input Cost Parameters
Enter your annual insurance costs, annual maintenance costs (for buying), interest rate on the loan, expected annual depreciation rate, and annual mileage. These factors significantly impact the total cost of ownership.
Step 4: Set Your Expected Ownership Period
Choose how long you plan to drive the car (e.g., 5 years or 7 years). This is crucial because buying has higher upfront costs and only becomes cost-effective if you keep the car long enough.
Step 5: Account for Mileage
Enter your annual mileage and, if leasing, the mileage allowance and excess mileage fee. Exceeding mileage limits on a lease can significantly increase your total cost.
Click "Recalculate" and you'll instantly see your total cost for both buying and leasing, your monthly payment breakdown, and how much you'll save with the better option.
When Should You Use This Calculator?
Before Making a Car Purchase or Lease Decision
Don't commit to a lease or financing agreement without understanding the true financial impact. Use this calculator to see the total cost of both options over your expected time with the vehicle, factoring in all expenses.
When Comparing Different Vehicles
Shopping for multiple cars? Run the calculator for each one to see which offers the best value. A cheaper car might cost more overall due to higher maintenance or depreciation, while a more expensive vehicle might be better if you plan to keep it longer.
When Your Driving Habits Change
If you're increasing your annual mileage or expecting to drive less, recalculate your lease vs. buy decision. High mileage can make leasing extremely expensive due to excess mileage fees, while low mileage might favor buying.
During Major Life Transitions
Planning to relocate, change jobs, or grow your family? Your transportation needs may shift. Use this calculator whenever your circumstances change to determine if your current lease or ownership plan still makes sense.
For Long-Term Financial Planning
Understand how vehicle costs fit into your overall budget and financial goals. A more expensive car option that provides 5-7 years of transportation might preserve more wealth than cheaper short-term leases if you value long-term asset accumulation.
Understanding Your Calculator Results
The calculator displays your comparison in clear, actionable parts:
Total Cost Comparison
See the cumulative cost of buying versus leasing over your chosen time period. This includes all loan payments, down payments, insurance, maintenance, fuel, mileage overages, and the residual value of the car if you buy.
Monthly Cost Breakdown
Understand what you'll pay each month for both scenarios, including loan payment, insurance, maintenance, and fuel costs for buying, compared to your lease payment plus insurance and fuel.
Total Savings or Extra Cost
The calculator clearly shows how much more or less you'll spend with one option versus the other. For example, "Buying is $8,500 cheaper than leasing over 5 years" or vice versa.
Impact of Key Variables
See how changes in interest rates, insurance costs, maintenance estimates, or mileage assumptions affect the final decision. This helps you understand which factors matter most to your decision.