Should you lease or buy your next car?

Run the real numbers before you sign the lease. A rigorous, transparent model — serial leasing vs buy-and-hold, invest-the-difference, break-even horizon — not a payment-vs-payment toy.

The basics

How long will you keep driving? (years)

yrs

Your holding horizon — the input that dominates this decision.

Negotiated vehicle price

MSRP

Residual value is calculated off MSRP, not the negotiated price.

Down payment / cap cost reduction

Distance driven per year (miles)

Advanced: Lease terms

Lease term (months)

Residual value (% of MSRP)

= $25,650 on this MSRP

Money factor

APR % = money factor × 2400 (0.00250 ≈ 6% APR). This one ≈ 6% APR.

Mileage allowance per year (miles)

Excess mileage charge (per mile)

Acquisition fee

Roll acquisition fee into the lease (capitalize)

Disposition fee

Security deposit

Refunded at each lease end.

Insurance difference vs owning (per month)

Leases often require fuller coverage. Leave 0 if unsure.

Advanced: Buying terms

Pay cash (no loan)

Loan APR

Loan term (months)

Registration / doc fees

Depreciation in year 1

Depreciation per later year (of remaining value)

Expected resale value at your horizon (optional)

0 = use the curve. Curve implies $15,086 after 6 years.

Warranty coverage (years)

Maintenance per year (under warranty)

Maintenance per year (after warranty)

Applied by vehicle age to both paths — a leased car is always young.

Advanced: Taxes & shared assumptions

Sales tax rate

Lease tax basis

Most US states tax each monthly lease payment; a few tax the full price upfront. Set the basis to match your state.

Investment return on cash you don't spend (per year)

Both paths invest the monthly difference, so identical money is deployed.

Business use (tax treatment)

Coming in a future update — lease/depreciation deductions are a separate module. Talk to a tax professional.

Verdict

Over your 6-year horizon, buying works out about $7,204 cheaper than leasing a new car every 3 years.

Break-even: buying overtakes leasing after about 3.6 years of ownership.

The pivot: if you actually replace your car every 3 years anyway, leasing is much closer to break-even — try setting the horizon to 3 years.

Lease (new one every 3 years)

$640.84/mo

Due at signing: $2,641
Total net cost: $50,565
Equity at end: $0

Buy & hold 6 years

$870.76/mo

Down payment + fees: $2,000
Total net cost: $43,361
Equity at end: $15,086

Lease (serial): $50,565Buy & hold: $43,361

Cumulative net cost (cash deployed minus investments and vehicle equity) — lower is better.

What's driving this

You keep cars roughly 6 years — well past a single 3 years lease. Long holding periods are where ownership wins.
The lease's money factor (≈6% APR) is cheaper money than your 7% loan.
After month 60 the loan is done — you'd own payment-free for 1 year while the lease keeps billing.
Depreciation does the heavy lifting on both sides: the car sheds $27,414 of value over your horizon either way — the question is who absorbs it and what your cash earns meanwhile.

Year-by-year comparison table

Year-by-year cumulative net cost for serial leasing vs buy-and-hold, with vehicle value and loan balance.
Point	Lease net cost	Buy net cost	Advantage	Car value	Loan balance
1 year	$10,754	$15,273	Lease +$4,519	$34,000	$36,363
2 years	$18,692	$23,117	Lease +$4,426	$28,900	$28,201
3 years	$28,839	$29,605	Lease +$766	$24,565	$19,448
4 years	$36,389	$35,373	Buy +$1,016	$20,880	$10,063
5 years	$43,686	$39,898	Buy +$3,787	$17,748	$0
6 years	$50,565	$43,361	Buy +$7,204	$15,086	$0

All defaults are editable estimates, not live market rates — confirm your money factor, residual value and fees with the dealer or lender before signing. Every formula is documented on the methodology page.

Full version with FAQ and model notes: Lease vs Buy Calculator · every formula documented on the methodology page.

All auto-finance calculators

Lease vs Buy Calculator

The flagship: serial leasing vs buy-and-hold over your real horizon, with invest-the-difference and break-even.

Auto Loan Calculator

Monthly payment, total interest, full amortization schedule, and what extra payments save you.

Lease Payment Calculator

Money factor + residual → monthly payment, with the depreciation and rent-charge breakdown shown.

Car Affordability Calculator

How much car your income and debts actually support, using income-share and DTI guardrails.

Total Cost of Ownership

Depreciation + interest + fuel + insurance + maintenance — the real cost per year and per mile.

Car Depreciation Calculator

What your car will be worth year by year, and why that curve drives every other number.

Guides that show the math

Why trust these numbers?

Every formula is published on our methodology page with a worked example you can verify by hand, every default lists its rationale, and the calculation engine is covered by automated tests against those same examples. We show estimates as estimates — and always tell you to confirm the dealer's actual figures. Read our editorial policy or about page.