The Finance AlgorithmTFA

Lease vs Buy Calculator

Calculator

Compare the cost of leasing versus buying a car outright

Free to useNo data storedAI insightsUpdated: February 2026

Lease or buy? Each has pros and cons for different situations. This calculator compares the total cost and helps you decide which option suits your lifestyle and budget.

Enter Your Details

Enter Your Details

$

Full purchase or lease base price

$

Monthly lease cost quoted

$

Price to buy at end of lease

%

Rate if you bought outright

$

Expected yearly driving (lease has limits)

Real-World Examples

3-Year Comparison

$45,000 car: Lease at $650/month for 36 months ($18,000 residual) vs buy at 7.5% for 60 months.

Inputs:

price:45,000lease:650leaseTerm:36loanRate:7.5
Leasing costs $23,400 over 3 years with nothing at the end. Buying: $27,000 in payments but $25,000+ in equity.

Frequently Asked Questions

Glossary

Residual Value
The guaranteed future value at lease end - the price to buy the car if you want to keep it.
Kilometer Allowance
Maximum km included in the lease. Excess km attract fees of 10-30 cents/km.
Equity
The value you've built in an owned car (market value minus remaining loan).

Disclaimer: This calculator provides estimates only and should not be relied upon for financial decisions. Interest rates, fees, and policies change frequently. Always verify information with lenders directly. This is general information, not personal financial advice. Consider seeking advice from a licensed mortgage broker or financial advisor.

Last updated: February 2026

How to Use
  1. Enter the vehicle price
  2. Add the monthly lease payment quoted
  3. Include the lease term and residual buyout
  4. Compare with loan rates for buying
  5. Factor in your annual driving distance
Key Information
  • Leasing = lower payments, but you don't own the car
  • Buying = higher payments, but you build equity
  • Leases have kilometer limits (typically 15,000-20,000/year)
  • Excess km fees can add thousands at lease end
Pro Tips
  • Leasing suits people who want a new car every 3-4 years
  • Buying is better if you plan to keep the car 5+ years
  • Calculator doesn't include maintenance - leases often include this
  • Consider novated lease for tax benefits if salary packaging
Avoid These Mistakes
  • Comparing only monthly payments, not total cost
  • Underestimating annual kilometers on a lease
  • Forgetting that leased cars must be maintained and returned in good condition
  • Not considering what you'll do at lease end
Ask AI anything