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Lease vs buy break-even

Lease vs buy break-even calculator

Leasing often looks cheaper over one lease term. This calculator extends the comparison year by year to estimate when buying and keeping the car catches up.

Vehicle
$
%

Applied to lease payments and the purchase price (simplified)

%

Estimated value lost each year if you buy

Lease
Lease term (months)
$
%

≈ 6.00% APR equivalent

$
$
$/mi
Buy
$
%
Loan term (months)
$

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Lease vs buy break-even calculator

Results and assumptions summary

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Estimated break-even

Year 3

Continuous leasing ≈ $685/mo average ($604 payment)

Cumulative estimated cost of leasing vs buying by year
YearLease totalBuy net costLower
1$8,216$11,410Lease
2$16,431$18,533Lease
3$24,647$24,369Buy
4$32,862$28,995Buy
5$41,078$32,468Buy
6$49,294$35,130Buy
7$57,509$37,393Buy
8$65,725$39,316Buy
9$73,940$40,951Buy
10$82,156$42,341Buy

What this means: by year 3, buying is estimated to cost $24,369 net of about $7,361 in equity, versus $24,647 for leasing over the same time. Before that, leasing is lower mainly because a newly bought car loses value fastest early on while loan payments are still building equity.

Assumptions used
  • Buy net cost = down payment + loan payments to date − (resale − remaining balance).
  • Resale = price × (1 − annual depreciation)^years. Lease cost repeats at today's terms.
  • Excludes maintenance, insurance differences, inflation and investment return on cash. Lease tax treatment varies by state.

Assumptions used

  • Buy net cost = down payment + loan payments to date − (resale − remaining balance).
  • Resale = price × (1 − annual depreciation)^years. Lease cost repeats at today's terms.
  • Excludes maintenance, insurance differences, inflation and investment return on cash. Lease tax treatment varies by state.

Educational estimates only — not financial, tax or legal advice. Actual rates, taxes, fees and vehicle costs vary.

https://myautocost.com/lease-vs-buy-break-even-calculator

Why break-even matters more than one lease term

A single lease vs buy comparison answers "which is cheaper over 36 months?" But people who buy often keep the car longer, after the loan is paid off. This page asks a different question: if you kept leasing versus bought once and kept the car, when would buying pull ahead?

Method

Lease cost(y) = (Due at signing + Payments + Disposition fee + Overage) ÷ Lease months × 12y

Buy cost(y) = Down + Loan payments made by y − (Price × (1 − d)^y − Balance(y))

The lease payment uses the standard depreciation fee plus rent charge (money factor × (cap cost + residual)), taxed at your rate. The loan uses standard amortization over your term.

Worked example

For a $40,000 car with a 36-month lease at 58% residual, continuous leasing averages about $685 a month. Buying with $4,000 down at 7% over 60 months and 15% annual depreciation reaches break-even in year 3 under these assumptions.

Assumptions and limitations

  • Depreciation is smoothed to a constant rate; real values depend on model, mileage, condition and market.
  • Lease tax is simplified to tax on each payment; many states differ, and some tax the total upfront.
  • Owners usually face more out-of-warranty maintenance later. Add it with the true cost of ownership calculator.
  • To see how much of the buy cost is interest, use the car loan interest calculator.

Frequently asked questions

Educational estimates only — not financial, tax or legal advice. Results depend on the inputs you provide and simplified assumptions. Confirm rates, taxes and fees with lenders, dealers and insurers before making decisions.

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