Total Cost to Buy: The all-in expense of financing, maintaining, and eventually trading in the car. It includes down payment, loan payments, maintenance estimates, minus residual value.
Cost Per Month (Buy): Total buy cost divided by the loan term in months. This figure assumes residual value and maintenance spread equally across all months.
Total Cost to Lease: Down payment plus all monthly lease payments added together. Does not include excess mileage or wear-and-tear charges.
Cost Per Month (Lease): Total lease cost divided by the lease term in months. A direct comparison point with the buy-side monthly cost.
Difference: Buy cost minus lease cost. Positive means buying is more expensive; negative means leasing is more expensive.
How This Calculator Works
The buy side uses standard loan amortization math to calculate monthly payments based on the principal (car price minus down payment), interest rate, and term. It then adds a rough $100-per-month placeholder for maintenance and insurance, and subtracts the residual value at the end of the loan term. The lease side simply sums the down payment and monthly lease payments. The calculator ignores registration, taxes, excess mileage fees, and wear-and-tear charges—all of which can swing the decision in real life.
Quick Questions
Why is the maintenance estimate fixed at $100 per month?
$100 is a rough placeholder for average maintenance and insurance on a typical car. In reality, these costs vary by car age, model, and driving habits. Use this estimate as a baseline; adjust downward if you have a reliable, well-warrantied car, or upward if you expect major repairs or high insurance premiums.
Should I believe the "better option" answer?
The "better option" tells you which path is cheaper in absolute dollars—but it's not the whole story. Leases offer predictable payments and warranty coverage but cap mileage and charge for wear. Buying offers ownership and unlimited mileage but requires maintenance and repair risk. Choose the path that aligns with your driving style, budget, and preferences.
What if I don't know the residual value?
Check industry resources like Kelley Blue Book or Edmunds for the car's expected residual value at the end of your loan term. Alternatively, ask a dealer for current trade-in values on similar models and year. Without a residual value, the calculator will show a higher buy cost, overstating the true cost of ownership.