Buy or Lease a Car Calculator
Should you buy or lease your next car? Compare monthly payments, total cost of ownership, and effective monthly cost for both options. Model money factor, residual value, taxes, excess mileage, and resale assumptions — no data ever leaves your browser.
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What’s Cheaper Over The Term?
Monthly Payment and Total Cost Comparison
Lease payments include depreciation and finance charges on the adjusted capitalized cost. Buying integrates loan amortization, taxes & fees, and resale assumptions at the end of the shared term. Choose the tax method that matches your state or province: taxing monthly payments or paying tax upfront on the adjusted cap cost.
- Effective monthly cost (EMC) spreads the total term cost over the lease length.
- Residual values are set by the leasing bank; resale values depend on market demand.
- Insurance, maintenance, and registration costs vary widely and are excluded here.
Should You Buy or Lease a Car?
Reasons to buy
- You drive a lot. High mileage triggers costly excess fees on a lease. Buying has no limit.
- You want to own the car long-term. After the loan is paid, you have zero monthly payment and a valuable asset.
- You want to customize. Leases restrict modifications; ownership doesn't.
- Lower total long-term cost. Buying a car and keeping it 7–10 years usually costs less than leasing every 3 years.
Reasons to lease
- Lower monthly payment. Leases finance only the depreciation, not the full price.
- Drive a new car every 2–3 years with the latest safety and technology features.
- Lower upfront cost. Many leases require little or no down payment.
- Warranty coverage throughout. Most leases fall within the manufacturer warranty period.
How the Effective Monthly Cost (EMC) helps
Monthly lease payments look attractive, but they don't account for the equity you build when buying. EMC divides the total term cost (payments + fees − resale value) by the number of months to give a fair comparison. A lease with a $350/month payment may have a higher EMC than a $480/month loan once you factor in the car's resale value.
Key numbers to gather before comparing
- Lease: MSRP, negotiated cap cost, money factor, residual %, term, acquisition fee, and your expected annual mileage.
- Buy: Purchase price, down payment, loan APR, loan term, and an estimated resale value at the end of the same term.
- Your dealer should provide all lease numbers. Use Edmunds or Kelley Blue Book for resale estimates.
FAQ
What is money factor?
The money factor is the lease financing charge. Multiply it by 2400 to estimate the equivalent APR. A lower money factor means less finance cost each month.
How is residual used?
Residual value is the expected vehicle value at lease end, expressed as a percentage of MSRP. It determines the depreciation portion of the lease payment.
Why does tax method change payment?
Some regions tax each monthly payment, while others charge sales tax upfront on the adjusted cap cost. Switching the method updates the monthly payment and total cost to match your local rules.
How do you estimate resale value?
Enter a percentage of the purchase price based on market guides or past data. The calculator subtracts that future resale value from the buy total cost to reflect money recovered when you sell the car.
Should I buy or lease a car?
Buying is usually better if you drive high mileage, plan to keep the car long-term, or want to build equity. Leasing is often better if you prefer lower monthly payments, like having a new car every few years, and stay within the mileage cap. Use this calculator to compare total cost for your specific numbers — the right answer depends on your situation.
Is leasing always cheaper per month than buying?
Yes — a lease payment is almost always lower than a loan payment for the same car because you're only financing the depreciation portion of the vehicle's value. However, at lease end you own nothing. The Effective Monthly Cost (EMC) in this calculator accounts for resale equity to give a fairer apples-to-apples comparison.
What happens if I go over the mileage limit on a lease?
Most leases charge 15–25 cents per mile over the annual cap. Enter your expected annual mileage and excess fee per mile in this calculator to see the full mileage cost factored into your lease total.