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Car Lease vs. Buy Calculator

Compare the financial costs of leasing versus buying a vehicle.

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Calculation Parameters

Specify your inputs below.

Calculated Result

Net Cost to Lease $16,200.00
Net Cost to Buy & Sell $15,000.00
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Expert Tip

Purchasing a car is usually cheaper in the long run if you plan to drive the vehicle for many years past loan payoff.

How this Calculator Works

This calculator compares the total costs of leasing a car against buying it with a loan. It factors in monthly payments, down payments, depreciation, and the residual value of the car at the end of the term.

Formula & Methodology

Lease Cost = Down Payment + Sum (Monthly Lease Payments) - Security Deposit Refund Buy Cost = Down Payment + Sum (Loan Payments) - Resale Value

Step-by-Step Calculation Example

Here is a step-by-step example showing how the calculations are performed:

Leasing costs $2,000 down and $300/month for 36 months ($12,800). Buying costs $3,000 down and $500/month for 36 months, but you sell the car for $12,000 at the end ($9,000). 1. Compare net costs: Leasing ($12,800) vs Buying ($9,000). Result: Buying is the more cost-effective option by $3,800.

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Detailed Insights & Expert Guide

ℹ️ About this Calculation

This personal finance and wealth planning calculator evaluates net worth growth, debt payoff acceleration (Snowball/Avalanche), FIRE retirement target numbers, home mortgage affordability, and budget allocation based on CFP financial planning standards.

Variable Glossary

Input

Personal Financial Data

Monthly expenses, annual salary, current savings balance, debt interest rates, employer 401k match %, or target retirement age.

Parameter

Wealth Target Output

FIRE nest egg target ($), debt-free payoff date, emergency cushion months (3-6x), or monthly mortgage ceiling ($).

How to Calculate Step-by-Step

1

Step 1

Input your income sources, fixed/variable monthly household expenses, or loan principal balances.

2

Step 2

Set your desired withdrawal rate (e.g. 4% Trinity rule), loan APR %, or extra monthly principal contribution amount.

3

Step 3

Review calculated financial freedom timeline, interest savings from debt payoff strategies, or retirement accumulation trajectory.

FAQ

What is the 4% rule in FIRE (Financial Independence) planning?
Derived from the Trinity Study, the 4% rule suggests withdrawing 4% of your total investment portfolio in year one of retirement (adjusted for inflation thereafter) provides a 95%+ probability of portfolio survival over 30 years.
What is the difference between Debt Snowball and Debt Avalanche?
Debt Snowball pays off debts from smallest balance to largest balance first for psychological momentum. Debt Avalanche pays off debts from highest interest rate (APR) to lowest to minimize total interest paid.
How much emergency fund reserve is recommended?
Financial planners recommend storing 3 to 6 months of essential living expenses (rent/mortgage, groceries, utilities, debt minimums) in a high-yield liquid savings account (HYSA).