Leasing rents depreciation; buying owns it
A lease payment is calculated to cover the car’s expected depreciation over the lease term, plus interest and fees — you’re effectively paying for the portion of the car’s value you use up, then handing the keys back. A loan payment covers the full purchase price, but at the end you own an asset with real resale value. The comparison isn’t “which payment is lower” — it’s which option costs less once you account for what you still have at the end.
Why the resale value estimate is the whole ballgame
The single input that most changes this comparison is your estimated resale value for the buy scenario. A car that holds its value well makes buying look meaningfully better than a car that depreciates quickly, even at an identical purchase price and loan terms. Research your specific make and model’s typical depreciation curve — some vehicles retain 55% of value after three years, others closer to 35%, and that spread is large enough to flip the calculator’s answer entirely.
What leasing actually gets you, beyond the payment
Lower monthly payments are the obvious lease benefit, but it’s not the only one. Leasing typically means driving a newer car more often, usually still under manufacturer warranty for the whole term, with no resale hassle when you’re done. Those are real, legitimate reasons to lease even when the buy option is cheaper in strict dollar terms — this calculator measures cost, not the value of convenience or driving a new car every few years.
What buying gets you, beyond the equity
Once a car loan is paid off, the “payment” disappears entirely — a paid-off car costs you maintenance and insurance, nothing else. A lease, by contrast, is a payment that never goes away as long as you keep leasing. If you tend to keep vehicles for many years past a typical loan term, buying’s advantage compounds well beyond what this calculator’s fixed comparison window shows, since it only measures the window you specify.
Using this calculator
Match the comparison window to your lease term for the most direct comparison, and get a realistic resale estimate from a source like Kelley Blue Book or Edmunds rather than guessing. If you tend to trade in or sell every few years regardless of lease or buy, a shorter window reflects your real behavior better than defaulting to a full loan term.
This article is for educational purposes only and isn't legal, financial, or tax advice. See our Disclaimer for details.
