Leasing looks cheaper every month, but at the end of a lease you own nothing — while a financed car leaves you holding an asset worth thousands. This calculator compares the two honestly over the same term: the net cost to buy (your payments and down payment, minus the car's residual value you keep) versus the total cash you'd spend on a lease. Enter your numbers to see which one actually costs less, then open the full True Cost of a Car calculator to fold in tax, insurance, fuel, and maintenance.
Buy: your monthly payment is the standard amortized loan on the price minus your down payment, at your APR over the term.
Net cost to buy = down payment + all loan payments − the car's residual value at term end, since financing leaves you owning an asset worth that residual.
Lease: total cost = lease down / drive-off amount + monthly lease payment × the number of months; at the end you own nothing.
The headline figure is total lease cost − net buy cost: positive means buying is cheaper by that much, negative means leasing wins.
Why subtract the residual value from the cost to buy?
Because when you finance, you keep the car. Its residual value — roughly what it's worth at the end of the term — is money you can recover by selling or trading it in, so it offsets your cost. A lease has no residual for you: you hand the car back and own nothing.
Is leasing or buying cheaper?
Over a single term, buying is usually cheaper in net cost because you end up owning a valuable asset, while leasing tends to win only on monthly cash flow. The right answer depends on your APR, the lease terms, and how long you keep the car — run your own numbers above.
Does this include insurance, tax, and maintenance?
No — this spoke compares the financing and lease cash flows head-to-head. Insurance, sales tax, fuel, and maintenance are similar whether you lease or buy, so they rarely change the verdict; the full True Cost of a Car calculator adds them for a complete ownership picture.