Matched-period method
How the lease versus buy comparison works
The comparison ends both choices on the same date. The lease side totals the cost of using and returning the vehicle. The purchase side totals cash paid through that date, adds the loan payoff needed to sell the car, then subtracts the expected sale proceeds.
The cost categories reflect the FTC’s consumer guidance on financing and leasing, which explains that a lease pays for use and expected depreciation while a purchase loan finances ownership.
Why the horizon matters
Compare both choices after the same number of months
A 36-month lease cannot be compared fairly with the full cost of a 60-month loan without accounting for what remains after month 36. At that point, the buyer still owns the vehicle but may also owe a loan balance. This calculator includes both by subtracting estimated resale value and adding the payoff balance.
- Use the lease term as the comparison period when deciding between a specific lease and purchase offer.
- Estimate resale value for that same date, not for the end of the purchase loan.
- Include only nonrefundable costs. Do not treat a refundable lease security deposit as an expense.
Do not stop at monthly payment
A lower lease payment can still cost more
The FTC advises shoppers to focus on total cost rather than monthly payment alone. A lease payment is often lower because it covers expected depreciation and a rent charge during a limited period, while purchase payments build ownership. Down payments, contract length, fees and end-of-term value can reverse the conclusion suggested by the payment.
Use the written out-the-door purchase price and lease worksheet. Advertised payments may assume a specific amount due at signing, a mileage limit or incentives you do not qualify for.
Worked example
A 36-month comparison with real exit costs
The example starts with a $499 monthly lease, $3,000 of other upfront lease costs and a $395 disposition fee. Driving 12,000 miles a year against a 10,000-mile allowance adds 6,000 excess miles, or $1,500 at $0.25 per mile. The purchase side uses $4,000 upfront, a $32,000 five-year loan at 6.5% APR and a $24,000 estimated value after three years.
Because the purchase loan still has a balance after 36 payments, the calculator adds that payoff before subtracting the resale value. That prevents the purchase option from looking artificially cheap.
Inputs that can change the answer
Stress-test mileage and resale value
Resale value is usually the most uncertain purchase input, while mileage and wear can materially change a lease return. The calculator displays the resale value at which both options break even. Try a lower resale value and a higher mileage estimate rather than relying on one optimistic scenario.
Insurance, fuel or electricity, registration and repairs are excluded unless you add expected differences to the maintenance fields. Include them only when they are likely to differ between the two specific vehicles or agreements.
Important limits
This is a cost estimate, not a recommendation
The result does not value flexibility, the ability to customize a purchased car, early termination, tax rules, opportunity cost or personal preferences. Contract terms vary. Review the written disclosures for mileage, wear, purchase options, fees and early termination before signing.
For purchase financing, the CFPB recommends comparing amount financed, APR, loan length and monthly payment to understand total cost.