Lease vs Buy Calculator

Two lines that answer different questions. One is what the car is worth as it depreciates: roughly a fifth gone in the first year, about 12% a year through year five, and around 7% a year after that. Buying three years old starts you further along that curve, so the same money drops more slowly from the day you buy.

The other line is what the car has cost you all in, and it is already net of the vehicle you still hold. Depreciation is the real expense, not the sticker price. Added to it: the loan interest, insurance and fuel, and repairs. Repairs are treated as zero for as long as the warranty runs, then start at the figure you set and compound at that rate every year after that, because an ageing car does not fail on a flat schedule. Insurance and fuel are charged at the same rate whether you own or lease, and they do not climb with age, so they lift both totals equally and never decide the answer.

With leasing switched on, the payment can be computed the way a dealer computes it: the depreciation you use up over the term, plus a finance charge on the money tied up in the car. Or you can type in a real quote. If that quote was given to you per week or every two weeks, it is first converted to a true monthly figure. Every two weeks is 26 payments a year, not 24, and reading it as half the monthly payment understates the cost by a full month of payments every year.

Leasing then splits in two. Lease again, and the payment steps up at each renewal; the car is always new, so the repair clock restarts every term, and if the term is shorter than the warranty, you never pay a repair bill at all. Buy it out, and you pay the residual plus the purchase fee, after which it is one continuous car costed exactly like the owned one; the buyout price is checked against what that car is actually worth on the open market, which is the only place a lease can be a bargain or a trap.

What this cannot know is your car in particular. The depreciation curve is a typical one, not any model’s resale record. Lease mileage limits, the charge for going over them, and the wear-and-tear bill at handback are not modelled, and they are where real leases go wrong. Neither is sales tax, on the purchase or on the payments, nor a trade-in, a lease down payment, or an accident. Loan interest is spread evenly across the term rather than front-loaded the way a real amortization schedule does it, which flatters the early years slightly. And nothing here invests the difference between the two payments for you.