Buy vs Lease Calculator
Deciding whether to buy or lease a vehicle can be confusing. Each option has unique financial implications, including monthly payments, total cost, equity, and tax considerations. Making the wrong choice could cost you thousands over the life of the vehicle.
The Buy vs Lease Calculator is designed to simplify this decision. It quickly calculates monthly payments, total paid over the term, vehicle equity, lease buyout, and net cost difference. By providing a clear recommendation based on your numbers, you can confidently choose the best path for your financial goals.
What Is the Buy vs Lease Calculator?
This calculator helps users compare the financial impact of buying vs leasing a car. It considers multiple factors, including:
- Vehicle price (MSRP)
- Down payment and trade-in value
- Loan or lease term
- Loan or lease APR
- Residual value for leases
- Annual mileage
- Sales tax
By analyzing both scenarios, it provides a side-by-side comparison of monthly payments, total cost over the term, and the vehicle’s value at the end.
Why Use a Buy vs Lease Calculator?
Many drivers underestimate the long-term costs of leasing or buying. This tool helps:
- Avoid paying more than necessary
- Understand equity and residual value
- Plan monthly budgets effectively
- Compare short-term affordability vs long-term investment
- Make a confident, informed decision
Instead of guessing or relying on salespeople, the calculator gives objective data tailored to your situation.
How the Calculator Works
Step 1: Enter Vehicle Price
Include the MSRP or negotiated price of the vehicle you plan to buy or lease.
Step 2: Input Down Payment and Trade-In
Subtract any upfront payments and trade-in value to calculate the loan or lease amount financed.
Step 3: Select Loan or Lease Term
Choose the number of months for your loan (36–72 months) or lease (24–48 months). Longer terms reduce monthly payments but may increase total cost.
Step 4: Enter APR / Money Factor
For a loan, input the annual percentage rate (APR). For a lease, enter the lease APR or money factor.
Step 5: Residual Value
The residual value is the vehicle’s estimated worth at the end of the lease. It’s expressed as a percentage of MSRP.
Step 6: Annual Mileage
Leases often have mileage limits, typically 10,000–15,000 miles per year. Exceeding the limit may lead to extra fees.
Step 7: Sales Tax
Enter your local sales tax percentage, which affects both loan and lease monthly payments.
Step 8: Click Calculate
The calculator will display a detailed comparison of buying vs leasing including monthly payments, total cost, and equity.
Key Results Provided by the Calculator
- Monthly Payment – Shows what you’ll pay per month for both buying and leasing.
- Total Paid Over Term – Total amount spent over the life of the loan or lease.
- Vehicle Value / Equity – How much your vehicle will be worth at the end of the loan.
- Lease Buyout – Cost to purchase the vehicle at lease end.
- Monthly Savings – Difference in monthly payment between buying and leasing.
- Net Cost Difference – Shows which option is financially better over the term.
- Recommended Option – A suggestion based on long-term cost, monthly payments, and equity potential.
Example Scenario
Assume the following:
- Vehicle Price: $35,000
- Down Payment: $3,000
- Loan Term: 60 months at 5.5% APR
- Lease Term: 36 months at 3.5% APR
- Residual Value: 55%
- Annual Mileage: 12,000 miles
- Sales Tax: 7%
Calculator Results May Show:
- Buy Monthly Payment: $635
- Lease Monthly Payment: $420
- Total Paid (Buy): $41,100
- Total Paid (Lease): $15,120
- Vehicle Equity at Loan End: $22,000
- Lease Buyout: $19,250
- Recommended Option: Lease for lower monthly payment if short-term; Buy for long-term equity
This allows you to quickly see the financial trade-offs between options.
Buying vs Leasing: Key Considerations
Buying a Vehicle
Pros:
- Builds equity
- No mileage restrictions
- Long-term savings if you keep the car
Cons:
- Higher monthly payments
- Responsible for maintenance after warranty
Leasing a Vehicle
Pros:
- Lower monthly payments
- Drive a new car every few years
- Covered by warranty during lease
Cons:
- Mileage limits
- No equity
- Extra fees for wear and tear
Tips for Using the Calculator
- Always include trade-ins and down payments for accurate results.
- Adjust APR rates carefully; even small differences affect total cost.
- Compare scenarios with different lease terms and residual values.
- Use net cost difference and monthly savings to determine your best option.
- Consider long-term ownership goals; buying may be cheaper over 5+ years.
Frequently Asked Questions (FAQs)
1. What does this calculator do?
It compares buying vs leasing a vehicle, calculating payments, total costs, and equity.
2. Can it handle trade-ins?
Yes, it subtracts trade-in value from the financed amount.
3. Does it include sales tax?
Yes, you can input your local rate to get accurate monthly payments.
4. Can I compare multiple lease terms?
Yes, changing lease terms updates payments instantly.
5. Does it show equity for a purchased vehicle?
Yes, the calculator estimates vehicle value at the end of the loan.
6. Is it suitable for all vehicle types?
Yes, it works for cars, SUVs, and trucks.
7. How is the lease buyout calculated?
It’s based on the vehicle’s residual value and MSRP.
8. What factors affect monthly payments?
Vehicle price, down payment, loan/lease term, APR, residual value, and sales tax.
9. Can it help me decide long-term vs short-term?
Yes, it compares monthly payments and total costs for informed decisions.
10. Does it include maintenance or insurance costs?
No, it focuses on financing and lease payments only.
11. How accurate is the recommendation?
It’s based on cost comparison and equity potential.
12. Can I use it for multiple vehicles?
Yes, input each vehicle’s data separately.
13. Does it calculate early payoff impact?
No, it assumes full term completion.
14. Is it free?
Yes, the calculator is completely free to use.
15. Should I still consult a dealer?
Yes, the calculator helps make a data-driven decision, but dealer incentives may also affect your choice.
Final Thoughts
The Buy vs Lease Calculator is an essential tool for anyone deciding between purchasing or leasing a vehicle. By providing a detailed comparison of monthly payments, total costs, equity, and net financial impact, it removes guesswork and helps you make the smartest financial choice for your situation.
Whether your priority is lower monthly payments or long-term value, this calculator ensures your vehicle decision is informed, confident, and cost-effective.