Car Lease vs. Buy Calculator Guide: Reading the Net Cost Comparison
How to compare leasing and buying a car on a fair net-cost basis, and what the comparison doesn't capture.
Comparing a lease payment to a loan payment directly is misleading — leasing almost always looks cheaper per month because you're only paying for the car's depreciation during the lease, not its full value. A fair comparison has to account for what buying gives you back: an asset you still own at the end.
The net cost formula
Net cost of buying = total paid − resale value + remaining loan balance
Leasing's net cost is simpler — it's just everything paid, since you return the car at the end with nothing to show for it (unless you exercise a purchase option, which is a separate decision). Comparing these two net numbers, not the monthly payments, is what the Car Lease vs. Buy Calculator does.
Why the comparison period matters so much
Over a short period (2-3 years), leasing usually wins — buying's resale value hasn't had time to offset the loan's early, interest-heavy payments. Over a longer period (5-6+ years), buying usually catches up and often wins outright once the loan is paid off and the car keeps providing value with zero further payments.
What the numbers don't capture
- Mileage limits and excess-mileage fees on a lease.
- Wear-and-tear charges assessed at lease-end.
- Rising maintenance costs on an aging owned vehicle.
- Sales tax treatment differences between leasing and financing in some states.