VVehCalc
Comparison Tool

Is It Better to Buy or Lease a Car

On a $35,000 car with $5,000 down, a 6% loan over 5 years and a $400 lease with $3,000 due at signing, buying costs about $21,300 net over 5 years after resale, while leasing costs about $27,000 over the same period. Leasing looks cheaper month to month but usually costs more if you keep the car long, and charges for miles over the limit. Buying wins for high-mileage drivers who keep vehicles many years; leasing suits those who want a new car every few years and predictable maintenance. New-car loan rates average about 6.4% (Experian Q1 2026) but used-car loans run near 11.4%, so a used-vehicle purchase needs a larger rate buffer. Run your own numbers, since incentives and residual values swing the result.

Results

Visualization

VehCalc provides estimates only. Vehicle prices, fuel, insurance, depreciation and loan terms vary by location, lender and vehicle. This is not financial advice — verify all figures with a dealer, lender or insurance agent before purchasing.

How It Works

For buying, we amortize the loan to get the monthly payment, then sum the down payment plus payments over your hold period and subtract the estimated resale value (we assume the car retains roughly 72% minus 6.4% per year). The result is your net cost of ownership. For leasing, we add the due-at-signing amount, all lease payments, and any excess-mileage charges (miles over the limit times the per-mile fee). The lower net number is the cheaper path. The chart plots cumulative cash out the door for each option so you can see when, if ever, buying pulls ahead.

What Should You Do?

Leasing hides the true long-run cost behind a low monthly payment and you never own the car. It makes sense if you drive few miles, want warranty coverage and like changing cars often. Buying wins once you pass the lease term and keep driving a car you own outright. Watch the mileage cap: if you are over by even 4,000 miles a year at $0.25/mile, that is $1,000 a year in penalties. Always compare the total net cost, not just the monthly figure.

Frequently Asked Questions

Why does buying usually win long term?

After the loan ends you own an asset and can drive it for free. Leasing means you keep paying forever and build no equity.

What about excess mileage?

Leases charge per mile over the limit, commonly $0.15-$0.30. High commuters can owe thousands at turn-in, which this tool adds to lease cost.

Are lease incentives real savings?

Manufacturer subsidies can make some leases cheap, but the total cost over many years is usually higher than buying the same car.

Should I buy new or used?

Buying used captures most of the depreciation another owner already paid. Leasing is almost always new-only.

What if I want a new car every 3 years?

Leasing is built for that cycle and can be competitive for short holds, but you pay repeatedly for that flexibility.

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Buy vs lease: how to read the comparison

Leasing almost always wins on the monthly payment; buying usually wins on total cost. This comparison puts both options on the same three- and five-year footing so you can see which is genuinely cheaper for your mileage and how long you plan to keep the car.

What the comparison includes

The buying side adds your down payment, every loan payment over the hold period, then subtracts the resale value you get back. The leasing side adds what you pay at signing, every monthly lease payment, and any excess-mileage charges. Comparing the two net figures is the only fair way to judge the cost, because the “cheaper” monthly payment hides a balloon payment, a mileage bill, or the value of the car you would have owned.

The mileage trap

Lease contracts cap annual mileage, commonly at 10,000 to 12,000 miles, and charge for every mile beyond that — often $0.25 or more. If you drive 14,000 miles a year on a 12,000-mile lease, you owe for 2,000 excess miles annually. Set your real mileage in the tool: for high-mileage drivers, the overage alone can erase the monthly advantage of leasing.

When leasing makes sense

  • You want a new vehicle every two or three years.
  • You drive under the mileage cap and keep the car in good condition.
  • You prefer a lower monthly outlay and a smaller down payment.
  • You can deduct the cost for business use and prefer predictable payments.

When buying wins

  • You keep cars six years or longer.
  • You drive high annual mileage with no cap to worry about.
  • You want an asset at the end rather than handing the car back.
  • You dislike wear-and-tear charges and mileage penalties.

Frequently asked questions

Is leasing always cheaper monthly?

Usually the payment is lower, but after excess mileage, wear charges, and the fact that you build no equity, the total cost over a five-year hold often favors buying.

What happens if I exceed my lease mileage?

You pay an excess-mileage fee per mile, commonly around $0.25, at the end of the lease. It can add hundreds or thousands of dollars depending on how far over you go.

Can I negotiate a lease?

Yes. The capitalized cost, money factor, and residual value are all negotiable, and a lower cap cost or money factor reduces the monthly payment.

Should I put money down on a lease?

Usually not much. A large down payment lowers the monthly figure but is lost if the car is totaled, and it does not change the total cost as much as it appears to.

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