Lease vs buy a car: compare total cost, mileage, and resale risk
2026-07-19
“Lease or buy?” is often answered with two monthly payments that do not represent the same thing. A purchase payment includes principal that may become equity; a lease payment mainly covers expected depreciation, a rent charge, taxes and fees for a fixed term and mileage.
The fair comparison ends on the same month, uses the same driving, and states what happens then: return the lease and pay contractual charges, or sell the purchased vehicle and use the proceeds to clear any remaining loan.
Direct answer
Compare a lease return and a financed purchase over the same number of months. The lease must include amount due at signing, all payments, insurance and maintenance not included, excess-mile charges, disposition and expected return fees. The purchase must include out-the-door price, interest accrued, insurance, maintenance and resale value. In this 36-month example, leasing costs $28,650 and buying costs about $28,542—a difference of only $108. The answer flips with mileage or resale, so neither monthly payment is a verdict.
Inputs to collect
- Same vehicle or two truly equivalent vehicles and the same comparison term
- Lease amount due at signing, monthly payment, taxes and fees without double-counting the first payment
- Annual mileage allowance, realistic miles and contractual excess-mile price
- Insurance, scheduled maintenance, tires and repairs not included in the lease payment
- Disposition, acquisition, early-termination, excess-wear and missing-equipment terms
- Lease residual or purchase-option price and an independent end-market estimate
- Purchase out-the-door price, down payment, APR, loan term and required products
- Purchase insurance, maintenance and conservative resale value at the same month and mileage
Formula
Lease-return cost = due at signing + monthly payment × months + nonincluded insurance/maintenance + max(actual distance − allowed distance, 0) × excess rate + expected return/end fees. Buy cost = out-the-door price + interest accrued during the same months + insurance/maintenance − resale value. Purchase-option gap = expected lease-end market value − option price; it is shown separately and is not assumed in the return scenario.
Worked example
Over 36 months, the lease has $3,000 due at signing, $475 monthly, $1,800 insurance and $300 maintenance per year, 10,000 miles allowed but 12,000 expected, $0.25 per excess mile and $750 end fees. Lease cost is $28,650, including $1,500 mileage. Buying costs $40,000 plus $3,500 fees, financed after $7,000 down at 6.5% for 60 months; add $1,900 insurance and $700 maintenance per year and subtract $28,000 resale. Interest accrued is about $5,242 and buy cost $28,542—only $108 lower, with about $16,032 still owed at month 36.
Sensitivity check
| Scenario | Changed input | Result |
|---|---|---|
| Drive within lease allowance | 10,000 miles/year instead of 12,000 | Lease $27,150; lease lower by about $1,392 |
| Drive 15,000 miles/year | 15,000 miles/year at $0.25 excess | Lease $30,900; buy lower by about $2,358 before mileage affects resale |
| Lower purchase resale | Buy resale falls from $28,000 to $25,000 | Buy about $31,542; lease lower by about $2,892 |
| Lease buyout is above market | $24,000 option versus $22,500 estimated market | Option is $1,500 above estimate; returning may be cheaper, subject to return fees |
Compare your lease sheet and purchase quote
Limitations
- A lease’s advertised monthly payment can exclude due-at-signing cash, taxes, registration, insurance, acquisition or disposition fees. Use the signed disclosure schedule.
- Unused miles normally do not create an automatic credit unless the contract says so. High mileage can also reduce a purchased car’s resale, so revise resale in the matching scenario.
- Closed-end and open-end leases allocate residual-value risk differently. This calculator models a return lease with stated end fees, not every open-end liability.
- Early termination can be very expensive and is not modeled as a probability. If the planned term is uncertain, obtain the contractual termination formula and test it separately.
- This is an educational comparison, not a vehicle, lease, loan, tax, insurance or legal recommendation.
Sources and verification
- Consumer Financial Protection Bureau — leasing versus buying a car
- Federal Trade Commission — Financing or Leasing a Car
- Consumer Financial Protection Bureau — Regulation M consumer-lease disclosures
Last verified:
Car lease-return vs buy cost calculator
Enter the signed lease disclosure and a comparable out-the-door purchase quote. The lease result assumes return; the option-to-market gap is shown separately.
- Lease-return total cost
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- Purchase holding cost
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- Cost difference
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- Total excess mileage
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- Excess-mile charge
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- Lease upfront plus payments
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- Lease insurance/maintenance
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- Purchase interest accrued
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- Purchase price minus resale
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- Purchase insurance/maintenance
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- Purchase loan balance at comparison
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- Purchase monthly payment
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- Market value minus lease option
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Educational estimate. Inputs stay in your browser. Verify the signed lease, mileage, insurance, return standard, purchase loan and resale independently.
Build the lease cost from its disclosure, not the advertisement
Regulation M requires consumer-lease disclosures for payment schedules, early termination and purchase options within its coverage. Copy the actual amount due at signing, monthly schedule, acquisition and disposition terms, taxes and fees. Do not count the first monthly payment twice if it is already included in due-at-signing cash.
Then list insurance, maintenance, tires and registration only when the lease payment does not include them. A lower payment that requires a large nonrefundable capitalized-cost reduction is not automatically a lower total cost.
Mileage is a priced option, not a footnote
The CFPB notes that many leases limit driving to 10,000–15,000 miles a year and charge for excess mileage and wear. Multiply the full expected excess by the contractual per-mile rate. The base example’s 2,000 excess miles each year cost $1,500 over 36 months.
Driving fewer miles reduces that charge but may not create a credit. For the purchase case, higher mileage usually lowers resale instead; revise the resale input so the same driving appears on both sides.
Separate return, buyout and early-termination decisions
The calculator’s lease total assumes you return the car. It compares the stated $24,000 purchase option with a $22,500 market estimate only as a separate −$1,500 gap. Buying out above market is not justified merely because prior lease payments are sunk.
Early termination is a different downside. CFPB warns that it can be very expensive and that a lessee cannot simply stop payments. If job, family or mileage uncertainty makes early exit plausible, obtain the formula and add that charge to a separate scenario.
A $108 difference is not a universal winner
The base lease is $28,650 versus about $28,542 to buy: functionally a tie. Staying at 10,000 miles makes the lease about $1,392 cheaper; driving 15,000 makes buying about $2,358 cheaper before revising resale. A $3,000 purchase-resale miss makes leasing about $2,892 cheaper.
Use real insurance quotes, comparable trim and all required products. If the question becomes new versus used or different powertrains, continue in the new-versus-used holding-cost guide rather than attributing vehicle differences to the payment structure.
General educational estimate, not a lease, loan, vehicle, insurance, tax or legal recommendation. Verify the signed documents before committing.