Lease scenario
Buy scenario
Based on your numbers
Buying saves you $8,851 over 5 years
after accounting for equity, fees and total payments
Lease results
- Monthly payment
- $574
- Total monthly payments
- $34,450
- Due at signing
- $2,000
- Acquisition + fees
- $1,000
- Disposition fee
- $400
- Equity at end
- $0
- Total true cost
- $38,450
Buy results
- Monthly payment
- $677
- Total monthly payments
- $40,599
- Down payment
- $5,000
- Total interest
- $5,599
- Vehicle value at end
- $16,000
- Equity at end
- $16,000
- Total true cost
- $29,599
Total true cost comparison
True cost = cash paid, plus any remaining loan balance, minus what the car is worth at the end. An estimate, not a quote.
Lease vs buy: key differences
Beyond the monthly payment, here is what matters.
Leasing
- ✓Lower monthly payment (typically 30–40% less)
- ✓New car every 2–3 years
- ✓Usually under warranty throughout
- ✓Lower upfront costs
- ✓Possible business tax deductions
- ✕No equity at the end
- ✕Mileage limits
- ✕Wear and tear charges at turn-in
- ✕Limited modifications
- ✕Always have a car payment
Often the lower total cost over 5+ years
Buying
- ✓Build equity: the car is yours once paid off
- ✓No mileage restrictions
- ✓Modify and customise freely
- ✓Payment-free driving once paid off
- ✓Lower total cost over long ownership
- ✕Higher monthly payment
- ✕Larger down payment recommended
- ✕Maintenance costs after warranty
- ✕Depreciation risk
- ✕Selling or trading effort
When leasing makes sense
Leasing isn't always worse. Here is when it wins.
Business use
If you use the car for business, lease payments may be tax deductible. Check with a tax professional for your situation.
You swap every 2–3 years
If you are going to trade in every few years anyway, leasing avoids the steepest part of depreciation: you only pay for the portion of the car's life you use.
Low-mileage driver
If you drive under about 12,000 miles a year, mileage allowances are not a problem. High mileage drivers face overage fees that erase the advantage.
When buying makes sense
For most people in most situations, buying wins long term.
You keep cars 5+ years
The maths overwhelmingly favours buying if you keep the car past the loan term. Years of payment-free driving are the real saving.
You drive a lot
Buying removes mileage penalties entirely. At typical overage rates, a few thousand extra miles a year adds up quickly on a lease.
You want freedom
Buying means no turn-in inspection, no wear charges and no mileage tracking. Customise it, road trip across the country, and let the dog ride in back.
Hidden costs most calculators miss
The full picture includes more than monthly payments.
Hidden lease costs
- ✕Acquisition fee (often rolled into payments)
- ✕Disposition fee at turn-in
- ✕Mileage overages
- ✕Excess wear and tear charges
- ✕Early termination penalties
- ✕A gap between leases when you never stop paying
Hidden buy costs
- ✕Depreciation: the biggest cost in the first years
- ✕Out-of-warranty repairs
- ✕Higher insurance for full coverage
- ✕Negative equity risk on long loans
- ✕Opportunity cost of your down payment
- ✕Selling hassle: time and effort to sell or trade
Key numbers to know
- 30–40%
- Lower lease payment vs buy
- ~60%
- Typical value left after 3 years
- Year 4–5
- When buying typically breaks even
- 12,000 mi
- A common lease mileage allowance
The real answer to: should I lease or buy?
The lease or buy debate generates strong opinions, but the right answer depends entirely on your own situation: how long you keep cars, how much you drive, whether you use the vehicle for business, and how much you value financial flexibility versus ownership.
Leasing wins on monthly cash flow. Because you only pay for the part of the car's value you use, monthly payments are often lower, and you get a new car with a full warranty coverage every few years. For business users who can deduct lease payments, the tax advantage can matter too.
Buying wins on total cost of ownership. The moment you make your last loan payment, the monthly cost of driving drops to fuel, insurance and maintenance. A buyer who keeps a car for seven to ten years will usually spend significantly less than someone who leases every three years, and still has a car to sell or trade in.
Use the calculator with your own figures rather than relying on generalisations. Compare the total true cost, not just the payment, and ask us about any fees before you sign.
Frequently asked questions
Is it cheaper to lease or buy?
Leasing usually has the lower monthly payment, but buying is usually cheaper over five years or more because you end up owning an asset. The calculator compares both for your numbers.
What are the hidden costs of leasing?
Acquisition and disposition fees, mileage overage charges, excess wear and tear, early termination penalties and the fact that you never finish paying.
When does leasing make financial sense?
If you use the car for business, drive low mileage, or like to swap into a new car every few years, leasing can work well.
Is buying the clear winner?
Not always. If you only want to keep a car for two or three years, the depreciation hit when buying can make leasing competitive.
What is residual value and why does it matter?
It is what the car is expected to be worth at the end of the lease. A higher residual means lower depreciation to pay for, and a lower monthly payment.
How does this calculator work?
It adds up everything you would pay under each option over your chosen time frame, then subtracts the equity you would own at the end. Treat the result as a guide, not a quote.
Know the numbers, now find your car
Whether you lease or buy, get a clear finance figure first and shop with confidence.