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Lease vs Buy Car Calculator

📅Last updated: October 31, 2025
✓Reviewed by: LumoCalculator Team

Compare the total costs of leasing versus buying a car. Calculate monthly payments, long-term expenses, and determine which option saves you more money.

Lease vs Buy Comparison

Buy Option
Lease Option

🏆 Buying is Better

Save $6,641.51 (13.2%)

💰 Buy Option

Monthly Payment:$517.64
Total Interest:$3,958
Total Cost:$58,558
Resale Value:-$15000
Net Cost:$43,558
Avg/Month:$725.97

🚗 Lease Option

Lease Payments:$30,200
Insurance:$7,500
Maintenance:$2,500
Fuel:$10,000
Total Cost:$50,200
Avg/Month:$836.67
Comparison over 60 months (5.0 years)

Lease vs Buy: Key Differences

FactorBuyingLeasing
OwnershipYou own the carDealership owns
Monthly PaymentsHigherLower (30-60% less)
MileageUnlimited10-15k/year limit
EquityBuild equityNo equity
CustomizationFully allowedNot allowed
End of TermOwn or sellReturn or buy
Long-term CostLower (if kept 6+ yrs)Higher ongoing

When to Buy vs Lease

✅ Buy If You:

  • •Drive over 15,000 miles/year
  • •Want to own and build equity
  • •Plan to keep car 6+ years
  • •Want to customize/modify
  • •Have good credit for low rates
  • •Value long-term savings

✅ Lease If You:

  • •Drive under 12,000 miles/year
  • •Want lower monthly payments
  • •Like driving new cars every 2-3 yrs
  • •Want warranty coverage always
  • •Use car for business (tax write-off)
  • •Don't want resale hassle

Cost Breakdown Examples

Example 1: $30,000 Honda Accord (5 Years)

💰 Buying
Down: $5,000
Monthly: $473/mo (5.5% APR)
Insurance: $1,500/yr
Maintenance: $1,000/yr
Resale: $15,000
Net Cost: $31,380
🚗 Leasing
Down: $2,000
Monthly: $350/mo
Insurance: $1,500/yr
Maintenance: $500/yr
End Fees: $500
Total Cost: $35,500
Result: Buying saves $4,120 (11.6%) over 5 years

Example 2: $50,000 BMW 3 Series (3 Years)

💰 Buying
Down: $10,000
Monthly: $789/mo (4.5% APR)
Insurance: $2,500/yr
Maintenance: $1,500/yr
Resale: $32,000
Net Cost: $28,404
🚗 Leasing
Down: $3,000
Monthly: $550/mo
Insurance: $2,500/yr
Maintenance: $500/yr
End Fees: $600
Total Cost: $25,900
Result: Leasing saves $2,504 (8.8%) for short 3-year period

Hidden Costs to Consider

⚠️ Buying Hidden Costs
  • • Higher insurance premiums (full coverage required)
  • • Major repairs after warranty expires
  • • Depreciation (lose 20% in year 1, 60% in 5 years)
  • • Registration and property taxes
  • • Loan interest can add $3k-$8k to total cost
⚠️ Leasing Hidden Costs
  • • Acquisition fee: $500-$1,000 upfront
  • • Disposition fee: $300-$500 at lease end
  • • Excess mileage: $0.15-$0.30 per mile over limit
  • • Wear and tear charges: $500-$2,000
  • • Gap insurance (often required)
  • • Early termination penalty (very expensive)

How to Calculate Total Cost of Ownership

1
Initial Costs
Down payment + taxes + registration + dealer fees
2
Monthly Payments
Loan/lease payment × number of months
3
Ongoing Costs
Insurance + maintenance + fuel + repairs
4
End Costs/Value
Buy: Subtract resale value | Lease: Add end fees
5
Compare Total
Divide by months to get average monthly cost

Tips for Getting the Best Deal

💰 Buying Tips
  • • Negotiate car price, not monthly payment
  • • Get pre-approved for financing
  • • Buy at end of month/quarter/year
  • • Consider certified pre-owned (CPO)
  • • Put down 20% to avoid underwater loan
🚗 Leasing Tips
  • • Negotiate capitalized cost (sale price)
  • • Ask for lower money factor (interest)
  • • Avoid excess down payment (>$2k)
  • • Negotiate disposition fee waiver
  • • Lease at end of model year for deals

Frequently Asked Questions

Is it better to lease or buy a car?
It depends on your situation. Buying is better if you drive over 15,000 miles/year, want to customize, plan to keep the car long-term, or value ownership. Leasing is better if you want lower monthly payments, always drive a new car, drive under mileage limits, and don't mind no equity.
What are the main advantages of leasing a car?
Lower monthly payments (typically 30-60% less), always driving new cars with warranty coverage, no resale hassle, potentially lower repair costs, ability to drive luxury vehicles affordably, and tax benefits for business use.
What are the main advantages of buying a car?
You build equity and own an asset, no mileage restrictions, freedom to customize or modify, lower long-term costs if kept 5+ years, no wear-and-tear penalties, and flexibility to sell whenever you want.
What hidden costs should I consider when comparing?
For buying: higher insurance, maintenance after warranty, depreciation, loan interest. For leasing: acquisition fees, disposition fees, excess mileage charges ($0.10-$0.30/mile), wear-and-tear penalties, gap insurance, and continuous payments without ownership.
How long should I keep a car to make buying worth it?
Generally 6+ years. The sweet spot is 8-10 years. Most depreciation occurs in first 3 years (50-60%). By year 6, depreciation slows significantly. The longer you keep it after paying off the loan, the more you save versus leasing.
Can I negotiate lease terms like I can negotiate car prices?
Yes! You can negotiate the capitalized cost (car price), money factor (interest rate), acquisition fees, and disposition fees. Also negotiate the residual value if possible. Many people don't realize lease terms are negotiable, giving dealers an advantage.

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