Independent personal finance guidance

Browse all guidanceCalculators
Menu

Interactive financial calculator

Lease vs. Buy Calculator

Read the original lease vs. buy calculator guidance with clear warnings and links to current official information.

1

Enter a scenarioUse your own estimates and time period

2

See the resultUpdates immediately as numbers change

3

Read the assumptionsKnow what is and is not included

Interactive calculator

Add your numbers

Compare the cash cost of a vehicle loan with a lease over the lease term.

Planning estimate

Lower cash outlay over lease term

Lease
Purchase cash paid
$26,540
Lease cash paid
$20,100
Difference
$6,440

Assumptions: This cash-flow comparison does not value the vehicle you own, a lease-end residual, mileage charges, maintenance, tax or fees.

Migrated from the original site

Original guidance, with a current-information warning.

Time-sensitive
Some details in this legacy article may no longer be current

Dates, dollar amounts, eligibility rules, rates and named programmes should be checked against the current official sources below before you act.

Read the migrated legacy article

Should you lease or buy your car? Use this calculator to find out! We calculate your monthly payments and your total net cost. By comparing these amounts, you can determine which is the better value for you.

Definitions

Term in months
Term in months for your auto lease or your auto loan.

Down payment
Amount paid as a down payment, which for leases is often called a capital reduction.

Other fees
Any fee, other than a capital reduction or down payment, required to be paid at the close of the lease or loan. This may include license, title transfer fees, etc.

Purchase price
Total purchase price. Price should be after any manufacturer's rebate.

Interest rate
Annual interest rate for your loan or your lease.

Sales tax rate
Percentage sales tax to be charged on this purchase. Sales tax is included in each lease payment. Sales tax for buying is charged on the total sale amount.

Rate of depreciation
The rate of depreciation gauges how fast your new automobile will lose its market value. A high depreciation rate is about 20% per year, medium is 15% per year and low is 10% per year.

Residual percent
For leases, this is remaining value after the lease term expires. The higher this amount, the lower your lease payment will be.

Market value of vehicle
Value of your auto after the lease term is over.

Investment rate of return
Rate of return on investments. This is the return that you would make if you were to invest your down payment or security deposit instead of using it in your auto purchase or lease.

The actual rate of return is largely dependant on the type of investments you select. From January 1970 to December 2003, the average compounded rate of return for the S&P 500, including reinvestment of dividends, was approximately 11.7% per year. During this period, the highest 12-month return was 64%, and the lowest was -39%. Savings accounts at a bank pay as little as 1% or less. It is important to remember that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment.

Lost interest on buy option
This includes any interest you would have earned at your investment rate of return on the buy option's down payment and other fees. If the monthly payment for leasing is less than the monthly payment for buying, this also includes any lost interest due to the higher monthly payments. If leasing is more expensive than buying, your interest costs for buying are reduced by the amount of interest you would earn on the difference.

Lost interest on lease option
This includes any interest you would have earned at your investment rate of return on the lease option's down payment, security deposit and other fees. Please see the definition for "Lost interest on buy option" for an explanation on how we account for any interest you might earn by having a lower monthly lease payment.
Check current information

Migrated 2026-08-14 · 531 words retained · Prohibited branding and links removed

Keep going

01

Calculator

Auto Loan Calculator

02

Calculator

Balance Your Checkbook Calculator

03

Calculator

College Savings Plan Calculator