CalculateY
Quick Answer
For a $35,000 vehicle, leasing at $350/month for 36 months with $2,000 due at signing costs an estimated $14,600 over 3 years. Buying with $5,000 down at 6% for 60 months costs approximately $35,800 total, but the vehicle is estimated to be worth approximately $20,100 after 3 years at 15% annual depreciation, making the estimated net buy cost approximately $15,700.
Lease Terms
Buy Terms
Common Examples
| Input | Result |
|---|---|
| $35,000 car, lease $350/mo 36 mo, buy $5K down 6% 60 mo, 15% dep, 3 yr | Estimated lease $14,600 vs buy net $15,700 |
| $30,000 car, lease $300/mo 36 mo, buy $3K down 5% 60 mo, 15% dep, 5 yr | Estimated lease $23,400 vs buy net $15,700 |
| $45,000 car, lease $500/mo 36 mo, buy $8K down 7% 60 mo, 20% dep, 3 yr | Estimated lease $21,000 vs buy net $20,400 |
| $25,000 car, lease $250/mo 36 mo, buy $5K down 4% 48 mo, 15% dep, 4 yr | Estimated lease $20,000 vs buy net $12,100 |
How It Works
The Formulas
Lease Total Cost = Due at Signing + (Monthly Payment x Lease Months)
If the comparison period exceeds the lease term, the calculator assumes a second lease with the same terms for the remaining months, adding another due-at-signing amount.
Buy Monthly Payment uses the standard amortization formula:
M = Loan x [r(1+r)^n] / [(1+r)^n - 1]
Where r = monthly rate (annual rate / 12 / 100) and n = loan term in months.
Buy Total Cost = Down Payment + (Monthly Payment x Loan Term)
Vehicle Value After Depreciation = Purchase Price x (1 - Depreciation Rate / 100)^Years
This uses the declining-balance method, where the vehicle loses a fixed percentage of its current value each year, not its original price.
Buy Net Cost = Buy Total Cost - Vehicle Value at End
The net cost represents what buying actually cost after accounting for the residual value of the vehicle. This is the fairest comparison to leasing, since a lease returns the vehicle at the end while buying retains an asset.
Depreciation Rates
Industry averages suggest most new vehicles depreciate approximately 15% to 20% in the first year and 10% to 15% annually thereafter. Luxury vehicles and electric vehicles may depreciate faster, while trucks and certain brands hold value better. This calculator applies a constant annual rate for simplicity.
Worked Example
For a $35,000 vehicle over 3 years. Lease: $350/month for 36 months with $2,000 due at signing. Lease cost = $2,000 + ($350 x 36) = $2,000 + $12,600 = $14,600. Buy: $5,000 down at 6% for 60 months. Loan = $30,000. Monthly rate = 0.005. Factor = 1.005^60 = 1.3489. Payment = $30,000 x 0.006744 / 0.3489 = approximately $580/month. Total paid for 3 years of the 5-year loan = $5,000 + ($580 x 36) = $25,880 (note: the loan continues beyond 3 years). Vehicle value after 3 years at 15% depreciation = $35,000 x 0.85^3 = approximately $21,494. If comparing at 3 years with remaining loan balance considered, the full net cost calculation shows the relative advantage of each option.