Lease vs Buy: The Real 3-Year Cost Comparison
| Scenario | Buy 3-yr (net of equity) | Lease 3-yr | Gap |
|---|---|---|---|
| $32,000 car, $3,000 down, 6.5% / 60mo vs $380 lease | $17,605 | $14,330 | lease saves $3,275 |
| $45,000 car, $5,000 down, 6.5% / 60mo vs $529 lease | $25,995 | $19,694 | lease saves $6,301 |
| $26,000 car, $2,000 down, 7.2% / 60mo vs $310 lease | $14,233 | $11,755 | lease saves $2,478 |
Lease-or-buy is usually argued with monthly payments, which is exactly the wrong unit. The lease wins on payment size by design - you are financing only the car's depreciation during the term, not the whole car. The honest comparison is three years of cash out minus what you own at the end: the buyer keeps an asset worth thousands, the lessee keeps keys and a walkthrough appointment.
On the calculator's default numbers - a $32,000 car, $3,000 down, a 60-month loan at 6.5% against a $380 lease - three years of leasing costs about $14,330 while buying nets about $17,605 after subtracting roughly $5,800 of equity. The lease saves real cash over three years; buying starts winning at year four when the loan ends and the payments stop. The right question is not which is cheaper but whether you still want this exact car in year four.
How to use
- Enter the car price, your down payment, the loan APR and term, then the lease monthly payment and its acquisition fee - all five appear on the dealer's worksheets, ask for the lease worksheet specifically.
- Compare the two three-year totals, then note the equity line: that is the buyer's money that survives the three years, which the monthly-payment comparison erases.
- Weight the mileage answer: over the lease mileage cap (10-12k miles a year typical) every excess mile costs 15-30 cents, which quietly flips close comparisons.
Frequently asked questions
Why does buying cost more in the first three years even though you build equity?
Because a 60-month loan amortizes slowly: three years in, the default buyer still owes about $12,700 on a $29,000 loan, so nearly $17,600 has left their pocket even after counting the $5,800 of equity. The lease front-loads nothing - $14,330 total - because it only ever financed the depreciation. Buying is the cheaper six-year answer and the dearer three-year one; the crossover is the loan's last payment.
What is the acquisition fee and can I avoid it?
It is the leasing company's origination charge, $595-1,095 at most captive lenders, almost always rolled into the capital cost so you pay it invisibly in the monthly payment. It is negotiable at the margin and sometimes waivable on returning customers, but plan on paying it - the calculator counts it up front to keep the comparison honest.
What happens at lease end that never happens when buying?
Three potential invoices: disposition fees around $395, excess mileage at 15-30 cents a mile beyond the cap, and wear-and-tear charges for dings, bald tires or missing keys. Walk-around disputes are common enough that pre-inspection a month early is standard advice. A buyer faces none of these - their "end of lease" is simply owning an older car.
Is leasing ever the financially smarter move?
Yes, in specific lanes: EVs where the manufacturer's lease captures the federal tax credit in the payment even when your taxes cannot; cars with brutal depreciation curves where the residual guarantees the loss is the lessor's; and business use, where the entire lease payment is deductible. Outside those lanes the math favors buying whenever you keep cars past the loan.
How does the 60-month loan change this comparison?
Directly: a 60-month term is why the buyer's three-year cost looks so high - only three-fifths of the loan has elapsed. At 48 months the gap shrinks, at 36 it mostly disappears, and refinancing rates move every line. Try your actual term in the calculator; the equity line barely moves but the out-of-pocket swings hard.