What is leasing vs buying?

Leasing and buying are two different ways to obtain a vehicle. When you lease, you essentially rent the vehicle for a fixed period (typically 2-4 years) and return it at the end. When you buy, you take out a loan and own the vehicle once it's paid off. Leasing typically has lower monthly payments but no ownership equity, while buying costs more monthly but builds equity and allows you to keep or sell the vehicle later. Understanding the total cost of each option helps you make the best financial decision for your situation.

Tool description

The Lease vs Buy Calculator helps you compare the total cost of leasing versus buying a vehicle. Enter the vehicle price, lease terms (monthly payment, down payment, fees), and loan terms (interest rate, down payment, expected resale value) to see which option is more cost-effective. The calculator shows both gross costs and net costs (accounting for the vehicle's residual value when buying), making it easy to understand the true financial difference between leasing and purchasing.

Features

  • Comprehensive cost comparison: Compare total costs of leasing vs buying side-by-side
  • Net cost calculation: Accounts for residual value when buying to show true ownership costs
  • Detailed breakdown: See monthly payments, interest, fees, and down payments for each option