Is it better to lease or buy a car?

Buying usually costs less over the long term if you keep the car for years. Leasing can suit drivers who want lower payments and a new car every few years and stay within mileage limits.

What happens at the end of a lease?

You return the car and pay any excess-mileage, wear or disposition fees, or buy it for the residual value stated in the contract.

Are lease payments always lower?

Usually, because you pay for the car's depreciation during the lease rather than its full price. But you own nothing at the end.

What is a lease mileage allowance?

The miles you can drive per year without extra charges, often 10,000-15,000. Extra miles are billed per mile at turn-in.

Can I end a lease early?

Usually yes, but early termination fees can be large. Check your contract before signing.

Lease vs Buy Car Calculator (2026) / CarO

Written by Muneeb Rana · Last updated 21 October 2026

Quick answer: A lease vs buy car calculator compares the net cost of each over the same period. Leasing cost = amount due at signing + monthly payments + end-of-lease fees. Buying cost = down payment + loan payments − the car's value at the end. Leasing often has lower payments; buying usually costs less if you keep the car for many years.

TL;DR

Compare both options over the same number of months.
Buying gets you equity; leasing gets lower payments and mileage limits.
Excess-mileage and wear charges can change the answer.

This lease vs buy car calculator puts both options side by side over the same time frame, so you can see the real difference rather than just comparing monthly payments. The CFPB notes that with a lease you're paying for the car's use, not ownership, and you'll face limits on mileage and wear.

How to use the lease vs buy car calculator

Enter the car price, the comparison period in months (usually the lease term), and your expected annual mileage.
Lease side: amount due at signing, monthly payment, mileage allowance, excess-mileage charge per mile, disposition fee.
Buy side: down payment, loan APR and term, and an estimate of the car's value at the end (use the depreciation calculator).
Compare net cost over the period and cost per month.
Try changing mileage: excess-mileage charges often flip the result.

How the lease vs buy car calculator works

lease_cost = due_at_signing + monthly * months + disposition_fee + max(0, miles_driven - allowance) * excess_rate
buy_cost   = down_payment + loan_payments_in_period + remaining_loan_balance - car_value_at_end

Loan payments use the standard amortization formula from the car loan calculator. Taxes, insurance and maintenance are similar either way and are excluded by default, but you can add them.

Worked example

A $32,000 car over 36 months, 12,000 miles a year. Lease: $3,000 at signing + 36 × $399 + $395 fee = $17,759. Buy: $3,000 down, 6.9% APR over 60 months (payment ≈ $573), so 36 payments = $20,628, remaining balance ≈ $12,800, car worth ≈ $19,600 at 36 months: $3,000 + $20,628 + $12,800 − $19,600 = $16,828. Buying comes out about $930 cheaper here, before any excess-mileage charges.

When leasing can make sense

You want a new car every few years, drive predictable mileage under the allowance, want lower monthly payments, or can deduct lease costs for business. Read the CFPB's lease vs buy explainer before signing.

When buying usually wins

You drive a lot, plan to keep the car beyond the loan term, or want to modify it. Once the loan is paid off, your costs drop to running costs only, which you can estimate with the cost of car ownership calculator and maintenance cost calculator.

Track it either way

Lease or buy, keep service records: lessors check condition at turn-in, and buyers get better resale with a full history. CarO's expense tracker and service records keep it tidy.

Download CarO free on the App Store or Google Play. Free with ads; optional in-app purchases.

Sources

CFPB: What is the difference between leasing and buying a car?: www.consumerfinance.gov (accessed 21 October 2026)
CFPB: Auto loans: www.consumerfinance.gov (accessed 21 October 2026)
AAA: Your Driving Costs 2025 fact sheet: newsroom.aaa.com (accessed 21 October 2026)

Disclaimer: CarO and this website give general car-care information, not professional advice. Maintenance intervals and specifications vary by vehicle, so always follow your owner's manual and a qualified mechanic. Mileage and cost figures are estimates; check local tax rules before using any log for deductions.

Lease vs Buy Car Calculator

Lease vs buy