Lease or Purchase Car Calculator

Leasing allows you to drive a new car with lower monthly payments than buying, though buying can be a better financial decision in the long term. Enter your estimated lease payments, loan or lease term, purchase price, down payment, and other factors into our calculator to see the financial impact of buying versus leasing a particular vehicle.

Pros of leasing

Lower monthly payments

One of the main advantages of leasing is lower monthly payments than you’d pay if you took out a loan to buy a car. Additionally, depending on where you live, you might pay sales tax only on the portion of the car’s value you use during the lease term.

New car every few years

When you lease, you get to drive a new car every few years without putting down a big down payment each time. You’ll also likely be able to drive a more expensive car than you would if you bought.

Less hassle

Because the car is new, you’ll pay less for repairs, and the warranty will cover any major issues. And at the end of the lease term, you can return the car and get a new one without the hassle of selling it.

Cons of leasing

Continuous payments

The main con of leasing is that you don’t build equity and you will never own the vehicle. When you buy a car, you eventually finish paying it off (usually in two to seven years), but lease payments are ongoing. That’s why buying can make more sense over the long run.

Mileage limits

If you exceed the lease’s mileage limits, you’ll pay extra — usually around 30 cents per mile. If you have a long daily commute, these costs can add up.

Less flexible to end

If your vehicle needs change (for example, if you have children), it will be expensive to terminate your lease early. If your contract allows lease transfers, you can try to find someone to take over your lease.

Pros of buying

Ownership

The primary benefit of buying a car is ownership. As you pay off a car loan, you build equity. Once it’s paid, you have an asset and a period of time without car payments, which can be financially liberating compared to the continuous payments of leasing.

Ability to sell or trade in

When you own a car, you can trade it in or sell it if your needs change or you want a different vehicle for another reason. If you have payments remaining on the loan, you can use the money from the sale to pay the loan off, and put the remainder toward a new car.

Less restrictions on use

You can drive a car you own as much as you want, with no restrictions on mileage. Additionally, while dings, scrapes, and wear and tear may lower the value of the car at trade-in, you won’t pay penalties for them as you would with a lease.

Cons of buying

Higher monthly payments

In the short term, buying is less affordable than leasing because monthly loan payments are usually higher than lease payments.

Long-term commitment

Buying a car makes more financial sense if you keep the same car in the long-term. If you like to drive a new car every few years, you likely won’t see the benefits of ownership.

More upfront costs

Buying a car usually involves more upfront costs than leasing, including a higher down payment, taxes, and fees.

Before you head to the dealership, do some research on the best car loans, leasing, and financing options — that way, you’re not obligated to accept the dealer’s financing terms.

It’s also a good idea to get a quote for insuring a new car before you purchase it. Having a quote in hand speeds things up at the dealership and gives you a sense of insurance costs for a particular vehicle before you buy or lease it.