Leasing vs. Buying: Which is Right for You?

Deciding whether to lease or buy your next car is a major financial choice with long-term implications. There is no single correct answer for everyone. The best choice depends on your financial situation, driving habits, and personal preferences. This calculator helps you look past the monthly payments to compare the total cost of both options over a set period.

How This Calculator Works

The calculator compares the total out-of-pocket expenses for both buying and leasing over the duration of the lease term you enter. For buying it calculates your payments and taxes then subtracts the car's estimated future value to find the true cost of ownership during that time. For leasing it simply adds up all your payments. This provides a direct, apples-to-apples cost comparison.

The Case for Buying a Car

Buying a car means you are paying to own it. Once the loan is paid off the car is yours free and clear. Here are the main advantages:

• Ownership and Equity: Every payment you make builds equity. When you finish paying the loan the car is a valuable asset you can keep, sell, or trade in.
• No Mileage Restrictions: You can drive as much as you want without worrying about excess mileage penalties that are common with leases.
• Freedom to Customize: As the owner you can modify or customize your car however you like.
• Lower Long-Term Cost: If you keep your car for many years after paying it off, buying is almost always cheaper in the long run.

The Case for Leasing a Car

Leasing is essentially a long-term rental. You pay to use the car for a set period, typically two to four years, and then return it to the dealership. The primary benefits include:

• Lower Monthly Payments: Because you are only paying for the car's depreciation during the lease term, monthly payments are usually lower than loan payments for the same car.
• Driving a New Car More Often: Leasing allows you to drive a new vehicle every few years, giving you access to the latest technology, safety features, and styles.
• Fewer Maintenance Worries: Most leases are for three years or less, meaning the car is typically under the factory warranty for the entire time you have it.
• No Resale Hassles: At the end of the lease, you simply return the car to the dealership. You do not have to worry about selling it or getting a fair trade-in value.

Disclaimer: This calculator provides an estimate for comparison purposes. Actual costs may vary based on your credit, specific dealer offers, and the actual resale value of the vehicle. This is not financial advice.