Lease vs buy: same car, two paths. Which costs less?
Drop in the lease offer, the buy terms, and how long you plan to keep the car. We will tell you the real total-cost difference over your ownership window.
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How this lease vs buy calculator works
Tell us the sticker price, the lease offer (monthly payment, term and drive-off), the loan you would use to buy (rate, down payment and term), and how many years you plan to keep a car. The calculator adds up what each path costs over that window.
Leasing cost is every monthly payment, plus a fresh drive-off payment each time one lease ends and the next begins.
Buying cost is your down payment, plus the loan payments you make, plus whatever you still owe on the loan when you sell, minus what the car is worth at that point. Counting the balance still owed matters: sell a financed car after three years and a big part of the sale price goes straight to the lender.
For resale we use one simple, stated assumption: 85 percent of MSRP after one year, then 10 points less each year, never below 40 percent. Models with strong resale often beat that curve and some luxury and electric models fall short of it, so treat the verdict as directional. Insurance and maintenance are left out because they are similar either way for the same car. A gap under $2,000 either way is called a close call.
Worked example: lease or buy a $35,000 car?
Say the car stickers at $35,000. The lease offer is $399 a month for 36 months with $3,000 due at signing. To buy, you would put $3,000 down and finance the rest over 60 months at 6.15 percent, the average new-car rate for prime borrowers (scores 661 to 780) in Experian data for Q2 2026. That loan payment is about $621 a month.
| Item | Keep 3 years | Keep 5 years |
|---|---|---|
| Total cost to lease | $17,364 | $29,940 |
| Still owed on the loan when you sell | $13,988 | $0 |
| Estimated resale value | $22,750 | $15,750 |
| Total cost to buy, after resale | $16,589 | $24,503 |
| Verdict | Close call | Buy wins |
Loan rate source: Experian, Q2 2026. Resale uses the stated curve above.
At three years the two paths land within $775 of each other. You would still owe about $13,988 when you sell, which eats most of the resale value. At five years buying comes out about $5,437 ahead, because the loan is paid off and you skip a second drive-off.
Change any input and the answer can flip. A lease with a subsidized money factor, or a model with weak resale, pushes the result toward leasing.
When leasing makes sense
- You reliably switch cars every two or three years anyway.
- You drive less than the mileage allowance. Common allowances are 10,000, 12,000 or 15,000 miles a year, and going over costs a per-mile fee set in your contract.
- You want the lowest monthly payment and accept that you will not build equity.
- The automaker is subsidizing the lease with a generous residual or a low money factor, which sometimes happens on models it needs to move.
When buying makes sense
- You keep cars five years or longer. Once the loan is paid off, every month of driving gets cheap.
- You drive a lot, or hard. No mileage caps and no wear and tear charges at turn-in.
- The model holds its value well, which makes the resale side of the math work for you.
- Your credit gets you a low loan rate. See car loan rates by credit score for where you likely stand.
Read the lease offer before you compare
A lease quote is only comparable once you know what is inside it. Check the cap cost (the price the lease is based on, which you can negotiate), any cap cost reduction, the acquisition fee and the disposition fee you may owe at turn-in.
Already in a lease? The lease end 90 day playbook and lease end equity and buyout math walk through your options, and how to spot dealer lease end tricks covers what to watch for at the dealer.
FAQ
Is it better to lease or buy a car?
It depends mostly on how long you keep cars. Over three years or less, leasing and buying often land close once you count the loan balance you still owe when you sell. Over five years or more, buying usually wins, because the loan is paid off and you skip a second round of lease signing costs. Run your real offer through the calculator above.
What is a money factor and how do I convert it to APR?
Money factor is the lease version of an interest rate, written as a small decimal. Multiply it by 2,400 to get the approximate APR. A money factor of 0.00250 works out to about 6 percent, which you can compare directly with a loan rate.
What does residual value mean on a lease?
Residual value is what the leasing company expects the car to be worth when the lease ends, set as a percentage of MSRP. A higher residual usually means a cheaper lease, because your payments cover the drop from the price to the residual, plus finance charges.
Can I buy my car at the end of the lease?
Usually, yes. Most lease contracts include a purchase option at the residual price plus any fee listed in the contract. When the residual is below what the car would sell for, that buyout can be a good used car deal.
Is putting money down on a lease a good idea?
Usually not much. A big payment at signing lowers the monthly number, but if the car is totaled or stolen early, that money is generally gone. Paying first month, fees and taxes up front and keeping the rest in your pocket is the safer move.