How to compare leasing and buying fairly
Monthly payment alone answers the wrong question. A lease payment is usually lower because you are paying for the vehicle's expected depreciation during the lease plus rent charge, tax, and fees. A purchase payment is paying down an asset you may still own after the comparison period. The fair comparison uses the same date and subtracts the buyer's remaining equity.
Why future vehicle value matters
The purchase result depends heavily on what the vehicle will be worth. No calculator can know that price in advance. Use a conservative estimate for the exact model, trim, mileage, condition, and market, then rerun the comparison with a lower and higher value. If a small change reverses the result, the decision is sensitive rather than certain.
Costs this calculator does not assume
Insurance, maintenance, repairs, annual property tax, registration renewals, fuel, charging, and mileage needs vary by driver and vehicle. Add only the expected difference between the two paths. The tool also does not value flexibility, warranty coverage, the risk of excess wear, or the benefit of owning a payment-free vehicle after the loan ends.
Get both offers in writing
The FTC recommends focusing on the complete written price and financing terms rather than only the monthly payment. For the purchase, collect the negotiated price, out-the-door fees, APR, term, and amount financed. For the lease, collect the payment, total due at signing, term, mileage allowance, disposition fee, and likely lease-end exposure. A dealership may earn reasonable, disclosed compensation; the numbers should still be clear enough to compare.
Frequently asked questions
Is leasing or buying a car cheaper?
It depends on the exact quotes and how long you compare them. Leasing can cost less over a short window, while buying leaves you with a vehicle and any remaining equity. Compare both over the same number of months.
Why does the calculator subtract equity from the cost of buying?
At the comparison date, a buyer owns an asset but may still owe a loan balance. Estimated vehicle value minus the remaining loan balance is the modeled equity retained, so it is subtracted from cash paid.
What future vehicle value should I enter?
Use a conservative estimate for the exact vehicle at the end of the comparison period. It is an assumption, not a guaranteed resale price, so test more than one value.
Does the calculator include insurance and maintenance?
Only if you enter their estimated difference under other costs. Insurance, maintenance, repairs, registration, and property taxes vary too much to assume accurately for every driver.
Official consumer sources
- CFPB: What to know about leasing versus buying
- FTC: Financing or leasing a car
- CFPB Regulation M: Required consumer lease disclosures
This is an educational estimate, not financial, tax, legal, lending, or vehicle-value advice. Written creditor and lessor quotes control.