How to use it
- Type the Price of the car and the Down payment when buying, from your own plan.
- Type the Loan interest rate per year and the Term in months from the loan offer, and the Monthly lease payment and Upfront lease payment from the lease offer.
- Type the Residual value at the end that you expect for the car when the term ends.
- Read Cheaper option and the two totals, then open Steps of the calculation to see how each was reached.
How the two costs are worked out
Buying: you pay the down payment and every loan payment, then subtract the residual value, what the car is still worth at the end of the term. The loan is the price minus the down payment, repaid in equal monthly payments at the loan rate.
Leasing: you pay the upfront amount and every monthly lease payment for the term, then hand the car back. Nothing is subtracted, because you do not keep the car.
Buying net cost = down payment + monthly loan payment × months − residual value
Leasing total cost = upfront lease payment + monthly lease payment × months
Monthly loan payment = loan × r ÷ (1 − (1 + r)^−n), with loan = price − down payment, r = yearly rate ÷ 12 and n = months- Both options are compared over the same number of months.
- The saving is the gap between the two totals; the cheaper option is the one with the lower total.
Why a lease costs what it does
The FTC explains that a lease payment is built from the car's expected depreciation, which is the price minus the residual value, plus a rent charge, taxes and fees. The calculator shows the total, so you can set it against what buying would cost.
The FTC also says a larger down payment lowers the total financing or leasing cost. The calculator shows that effect for the buying option.
What this calculator does not include
- Sales tax and registration fees, which the lease or loan contract sets out.
- Insurance. The FTC says a lessee must maintain insurance that meets the leasing company's standards.
- Mileage charges, damage charges and early end charges, which the FTC says a lessee may have to pay.
- Any change in the car's value. The residual value is the figure you enter, not a forecast.
Worked example: a 35,000 car over 36 months
The loan is 35,000 − 3,000 = 32,000 at 6.5% a year over 36 months. The monthly payment is 980.77, so the 36 payments come to 35,307.72. Buying costs 3,000 + 35,307.72 − 22,000 = 16,307.72.
The lease costs 2,000 upfront plus 36 payments of 420, which is 17,120.00. With these figures, buying is cheaper by 812.28 over the 36 months.
| Amount | |
|---|---|
| Monthly loan payment | 980.77 |
| Buying: net cost over the term | 16,307.72 |
| Leasing: total cost over the term | 17,120.00 |
| Difference between the two | 812.28 |
Frequently asked questions
Is leasing always more expensive than buying?
No. The answer depends on the figures in your offers, such as the price, the lease payment, the residual value and the loan rate. Change one figure at a time to see which one decides the result.
What is a residual value?
It is the value the car is expected to have when the term ends. A lease charges for the car's expected depreciation, which is the price minus the residual, so a higher residual value means less depreciation to pay for.
Does a bigger down payment help?
Usually, yes. The FTC says a larger down payment lowers the total financing or leasing cost. In this calculator a larger down payment means a smaller loan, so the monthly payment and the interest fall.
Why does the mileage limit matter for a lease?
The FTC says the annual mileage limit in most standard leases is 15,000 miles or less, and going over it usually means an extra charge at the end. The calculator does not include mileage charges, so add any expected charge to the lease figure.
What happens if I end a lease early?
The FTC says that ending a lease early can mean a substantial early termination charge. This calculator assumes the lease runs for the whole term, so an early end would change the result.
Does this calculator give financial advice?
No. It works out the cost of the figures you enter. The contracts, your own budget and a qualified adviser should decide the real choice.
Sources
Figures and text last checked on Thursday, November 12, 2026.