Car Lease vs. Buy Calculator

How long you keep the car and what you do with the monthly savings determine the answer. Leasing has lower payments but no equity and mileage caps. Buying costs more upfront but you own an asset after payoff. The three-way comparison that matters: lease vs. buy vs. investing the payment difference.

The invest-the-delta path takes whichever option has the higher monthly cost (usually buying) and invests the monthly difference between that cost and the cheaper option's payment. For example, if buying costs $600/month and leasing costs $450/month, the invest path puts $150/month into an investment account growing at your assumed return rate. At the end of the model period, this accumulated investment portfolio is subtracted from the more expensive path's net cost to show the true financial comparison.

Lease agreements include costs that aren't obvious in the advertised monthly payment. Upfront costs include cap cost reduction (similar to a down payment), acquisition fees, and the first month's payment. Ongoing costs include the monthly payment plus full-coverage insurance (required by lessors). At lease end, you may face disposition fees, excess mileage charges (typically $0.15–$0.25/mile over the limit), and wear-and-tear charges. The calculator's upfront lease cost and monthly payment fields let you capture these so the total cost comparison is accurate.

The buy path applies annual depreciation as a percentage of the current car value not the original price. This is compound depreciation. At 15% annual depreciation, a $35,000 car is worth $29,750 after year 1, $25,288 after year 2, and so on. The car value at the end of your model period is subtracted from total payments made to arrive at net cost. Depreciation rates vary significantly by make and model luxury cars often depreciate faster, while trucks and certain Japanese brands depreciate slower.

With interest rates elevated in 2025, auto loan APRs are higher than they were a few years ago, which increases the cost of buying financed. Some manufacturers are offering subvented (subsidized) lease rates that are more favorable than retail financing. However, lease residual values (what the manufacturer guarantees the car will be worth at lease end) have also normalized after the high used-car prices of 2021–2022. Your specific numbers determine the answer — manufacturer incentive programs shift frequently and vary by model.