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
  • Clear recommendations: Visual indicator showing which option saves more money
  • Percentage difference: Shows how much cheaper one option is compared to the other
  • Flexible inputs: Customize all parameters including loan terms, lease terms, and fees
  • Real-time calculations: Results update instantly as you adjust values

Use Cases

  • New vehicle purchase decisions: Determine whether to lease or buy your next car
  • Budget planning: Understand the long-term financial impact of each option
  • Lease vs buy analysis: Compare deals from different dealerships
  • Financial planning: Factor in expected resale value to see true ownership costs
  • Business decisions: Calculate costs for company vehicle fleet management
  • Trade-off evaluation: Balance lower lease payments against ownership benefits