Leasing and buying trade the lead as the months pass. This tool lines the two paths up side by side, year by year, finds the month where buying pulls ahead for good, and works out the mileage where lease overage fees change the answer.
Buying is scored each month as cash spent minus the equity held at that moment, so the two lines can be compared fairly at any point. After the first lease ends, the lease path assumes you sign another lease on the same terms. Overage fees are charged at the end of each lease based on the miles entered.
A single total cost figure hides the most useful part of the lease versus buy story: the lead changes hands over time. Leasing is usually ahead in the first couple of years, buying pulls level somewhere around the end of the first lease, and from then on buying stretches its lead every single month. This calculator is built around that timeline. It places the two paths side by side in a year by year table, marks the break-even month where buying takes a lasting lead, and shows how your annual mileage can move that break-even point.
The inputs mirror a real pair of quotes. One price feeds both paths. The loan side takes a down payment, an APR and a term. The lease side takes a term, a money factor, a residual percentage and the fees that repeat with every lease. Mileage fields capture how far you drive against the lease allowance, and a horizon selector lets you compare over three to six years, long enough to see the second lease begin.
Why A Year By Year View Beats A Single Total
Most comparisons answer the wrong question. They ask which route costs less over some fixed period, when the real question is how long you will keep the car. A driver who changes cars every three years lives entirely inside the window where leasing is strongest. A driver who keeps a car for eight years lives where buying dominates. The same pair of quotes produces opposite sensible answers for those two people, and only a timeline shows both of them.
The year by year table also exposes the shape of each cost. Lease costs climb in steps, jumping each time a new lease is signed and its upfront cash is due again. Buying costs climb smoothly, then flatten in slope once the loan is finished, because after that the buyer spends almost nothing while the equity keeps growing. Seeing those two shapes next to each other teaches more than any pair of totals can.
The Two Monthly Payments, Side By Side
The monthly comparison is where most shoppers stop, and it is worth understanding properly before moving on. The loan payment amortises the full amount financed, price plus tax minus down payment, across the loan term. The lease payment covers only the depreciation between the capitalised cost and the residual, plus a finance charge on that shrinking slice, plus tax on the payment itself. On the same car, the lease payment almost always lands lower, typically by 15 to 30 percent.
That lower payment is real money each month, and for a household managing cash flow it matters. What it is not, is a saving. It is the price of using the newest and most expensive years of a car and then handing it back. The table in this tool keeps the monthly figures visible at the top, then shows what each stream of payments adds up to once equity and repeated lease fees enter the ledger.
Reading The Year By Year Table
Each row of the table is a checkpoint at the end of a year. The buying figure is cumulative cash spent, down payment and payments, minus the equity held at that checkpoint, which is the car value less the loan balance. The leasing figure is cumulative cash spent on signing amounts, monthly payments, disposition fees and mileage overage charges, with a new lease assumed each time the old one expires. The gap column names the leader at that checkpoint and by how much.
- End of year 1: buying about 10,271 dollars, leasing about 9,435 dollars, lease ahead by roughly 836 dollars.
- End of year 2: buying about 17,024 dollars, leasing about 16,371 dollars, lease ahead by roughly 653 dollars.
- End of year 3: buying about 22,483 dollars, leasing about 25,201 dollars, buying ahead by roughly 2,718 dollars.
- End of year 4: buying about 26,419 dollars, leasing about 34,636 dollars, buying ahead by roughly 8,217 dollars.
- End of year 6: buying about 31,531 dollars, leasing about 50,402 dollars, buying ahead by roughly 18,871 dollars.
Those checkpoints come from a 35,000 dollar car, 6 percent tax, a 60 month loan at 7.5 percent with 3,000 dollars down, and a 36 month lease at a 0.00210 money factor with a 58 percent residual, driven 12,000 miles a year against a 10,000 mile allowance. Notice how the lease lead shrinks through year 2, vanishes during year 3, and then turns into a buying lead that widens dramatically once a second lease must be signed. That crossover pattern is the signature shape of nearly every lease versus buy comparison.
The Break-Even Month Explained
The two cost lines can cross more than once in the early months, because a new car loses value quickly while the loan balance falls slowly, and because the lease signing cash lands on day one. A crossing that matters is the lasting one: the first month after which buying stays ahead for the rest of the window. In the worked example that month is month 31, shortly before the first lease ends. From that point the buyer never trails again, and the lead compounds.
Break-even month is the single most practical number in this tool. If your realistic keeping period is shorter than the break-even month, the lease is the cheaper structure for you, whatever the six year totals say. If you will keep the car well past it, buying wins by a margin that grows with every extra month. Drivers who honestly do not know their keeping period should weight the decision toward the option that stays flexible, and a purchased car can be sold in any month, while a lease exit mid term is usually expensive.
Mileage And The Break-Even Point
Mileage attacks the lease from two directions. Drive beyond the allowance and each extra mile is billed at return, commonly 20 to 30 cents, which the example prices at 25 cents across 2,000 extra miles a year, adding 1,500 dollars to every three year lease. Drive far below the allowance and the opposite waste appears: you paid for depreciation you never used, and the leasing company keeps the difference. The break-even mileage figure in this tool solves for the annual mileage at which the lease total, overage included, exactly equals the buying net cost over one lease term.
In the worked example the break-even mileage lands exactly on the 10,000 mile allowance, which is a useful coincidence to learn from. It means the lease is already the more expensive path before a single overage mile is driven, so every mile beyond the allowance only widens the buying lead. On a more generous lease offer the break-even mileage would sit above the allowance, telling you leasing stays cheaper until your driving passes that threshold. Either way, entering your true mileage, not the allowance printed in the advert, is what makes the output mean something.
What Happens When The First Lease Ends
The end of the first lease is the hinge of the whole comparison. The buyer at month 36 holds a car with real equity and a shrinking balance, and every further payment is mostly principal building that equity. The lease driver at month 36 holds nothing and must immediately spend again: another signing amount, another acquisition fee, and another three years of payments on a new car at whatever prices and rates apply then.
This is also where lease loyalty offers appear, with disposition fees waived and signing cash trimmed for drivers who stay with the brand. Those offers soften the step in the lease line but never remove it, and this tool lets you model them directly by lowering the due at signing and disposition fee fields. If a loyalty deal is genuinely on the table, rerun the comparison with the reduced figures before deciding the first lease was a mistake.
Using The Table To Plan Your Next Move
The most useful way to run this calculator is backwards from your own habits. Look at how long you kept your last two cars. That span, honestly measured, is your horizon. Set the comparison window to match it, enter real quotes, and read the gap at your horizon row rather than the final row. A driver with a four year habit should decide on the year 4 gap, where buying in the example already leads by more than 8,000 dollars, not on the monthly payments where leasing still looks attractive.
Then test the fragile assumptions. Drop the car price by a negotiated 5 percent on both paths and see whether the break-even month moves. Raise your mileage to the most you might plausibly drive and watch the lease column. The decision that survives those stress tests is the one to sign. Financing structures reward the driver who knows their own timeline, and this table exists to make that timeline visible before the paperwork starts.
How Sensitive Is The Break-Even Month
The break-even month is not a fixed property of the car. It is a property of the two quotes, and it moves when the quotes move. A one point improvement in the loan APR pulls it earlier, because the balance falls faster and the interest drag shrinks. A higher residual on the lease pushes it later, because the lease payments shrink while the buyer is still credited with the same end value. Even the down payment matters: more cash down builds equity faster and can pull the lasting crossover forward by several months.
This sensitivity is precisely why the table beats a verdict. A dealer can reshape a quote in minutes, trimming the money factor here or lifting the trade-in there, and each change quietly rewrites the timeline. Rerunning the comparison after every revision takes seconds and prevents a common trap, where a shopper negotiates hard on the monthly lease payment while the break-even month slides a full year later behind their back. If a revised quote moves the crossover beyond the span you actually keep cars, the revision made your deal worse, whatever it did to the payment.
Frequently Asked Questions
What does the year by year table show?
It shows the cumulative net cost of buying and of leasing at the end of each year in the window. The buying figure is cash spent minus equity held at that checkpoint, and the leasing figure is all lease cash spent, including repeated signing costs and overage fees.
What is the break-even month?
It is the first month after which buying stays cheaper than leasing for the rest of the comparison window. Short early crossings are ignored, because the lasting lead is the one that decides which structure costs less for a keeper.
Why does leasing lead in the early years?
Early on, the lease driver has spent less cash overall, while the buyer has paid a down payment and is still fighting the steepest depreciation with a high loan balance. The equity that eventually wins the comparison for buying takes time to build.
Why does buying pull away after the first lease ends?
Because the lease driver must sign again and pay upfront costs a second time, while the buyer simply continues payments that are increasingly principal. Once the loan ends, the buyer spends almost nothing and the lead grows quickly.
What is break-even mileage?
It is the annual mileage at which the total lease cost over one term, including overage charges, exactly equals the net cost of buying over the same term. Driving more than that figure makes the lease steadily worse value.
How are mileage overage fees calculated here?
The tool compares your annual miles with the lease allowance, multiplies the excess by the years in the lease term and by the per mile charge you enter, and adds that amount to the lease cost at the end of each lease.
Does the tool assume I lease again after the first lease?
Yes. To keep transport continuous across a multi year window, the lease path signs a fresh lease on the same terms each time one expires, including its signing cash and fees. That repetition is exactly why long windows favour buying.
Can I model a lease loyalty offer?
Yes. Lower the amount due at signing and the disposition fee to the loyalty figures offered, then rerun. The table and break-even month update to reflect the softer second lease, though the structural gap usually remains.
Why can the two lines cross more than once early on?
A new car depreciates fastest in its first months while the loan balance falls slowly, so buyer equity can dip before it grows. Combined with the day one signing cash on the lease side, the lead can swap briefly before settling.
Which horizon should I choose?
Choose the span that matches how long you realistically keep a car, based on your own history rather than your intentions. The right answer for a three year keeper and an eight year keeper is often the opposite financing structure.
What money factor should I enter?
Use the money factor from an actual lease quote, and ask for it in writing if it is not shown. Multiply it by 2400 to see the approximate APR it represents, which is a fast way to spot an inflated finance charge.
Does a bigger down payment move the break-even month?
It can move it earlier, because more cash down means a smaller balance and faster equity growth. It also ties up more of your money in a depreciating asset, so the tool shows the trade rather than recommending a figure.
What if I drive far fewer miles than the allowance?
Then part of the lease payment buys depreciation you never use, and the unused miles have no cash value at return. In that case a lower allowance lease, if offered, or buying, usually serves you better than a standard lease.
Are maintenance and repairs included in the table?
No. The table compares financing structures only. An owned car out of warranty will add repair costs the lease driver avoids, which narrows the buying lead slightly in later years, though rarely enough to erase a large gap.
How should I act on a very close result?
Treat it as a tie and decide on flexibility. A purchased car can be sold, kept or traded in any month with no penalty, while a lease fixes your exit points. When the money is level, that freedom is worth having.