Car Lease vs Loan Cost Comparison Calculator
Compare the net cost of leasing a car against financing it with a loan over the same term, accounting for the loan's amortized payments and the car's resale (residual) value.
Last updated: May 2026
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About this calculator
Leasing and buying are compared over the same number of months. The lease cost is simple: leaseMonthly x leaseTermMonths + leaseDownPayment, since at the end you hand the car back and keep nothing. Buying with a loan is more involved. The financed amount is carPrice minus loanDownPayment. The standard amortization formula turns that into a fixed monthly payment using the monthly rate (loanRate / 100 / 12) over leaseTermMonths payments; multiplying by the number of months gives total payments, and adding the down payment gives total cash spent. But when you buy you still own the car, so its resale value (carPrice x residualPercent / 100) is subtracted as money you get back. The result is lease cost minus buy net cost: a negative number means leasing is cheaper for that period, a positive number means buying is cheaper.
How to use
On a $35,000 car: leasing at $399/mo for 36 months with $3,000 down costs 399 x 36 + 3,000 = $17,364. Financing $30,000 (after $5,000 down) at 6.5% APR over 36 months works out to about $919/mo, or $33,098 in payments, plus the $5,000 down = $38,098 spent. If the car is worth 55% of $35,000 = $19,250 at the end, your net buy cost is 38,098 - 19,250 = $18,848. Lease minus buy = 17,364 - 18,848 = about -$1,484, so leasing is roughly $1,484 cheaper over these three years.
Frequently asked questions
Is it cheaper to lease or finance a car for 3 years?
Over a short 3-year horizon, leasing is often cheaper on raw cash outlay because you only pay for the depreciation during that period, not the whole car. Financing costs more up front but leaves you owning an asset with resale value. This calculator nets out the resale value so the comparison is apples to apples; whether leasing or buying wins depends heavily on the interest rate and the car's residual value.
How does resale value affect the lease vs buy decision?
Resale (residual) value is the single biggest swing factor when buying. A car that holds 60% of its value is far cheaper to own than one that holds 40%, because you recover more of your money when you sell. Brands with strong resale value make buying more attractive, while cars that depreciate quickly often make leasing the lower-cost choice. Try adjusting the resale percentage to see how sensitive the result is.
Why is the loan payment higher than the lease payment for the same car?
A lease payment only covers the car's expected depreciation over the term plus a finance charge, whereas a loan payment pays down the entire purchase price plus interest. That is why monthly loan payments are usually larger. The trade-off is that at the end of the loan you own the car outright and can sell it, which the resale value term in this calculator credits back to you.