Auto Loan vs Lease Comparison

Enter the vehicle price, down payment, interest rate, and term to compare the monthly payment and total cost of buying with an auto loan versus leasing, side by side.

Tips

  • Looking only at the monthly payment can make leasing look cheaper, but remember you won't own the car once the lease ends.
  • Residual value rates vary widely by make and model, so a real quote from a leasing company may turn out more favorable than this estimate.
  • The down payment reduces the financed amount for both buying and leasing, but the trade-in value only affects buying and the residual rate only affects leasing.
  • If you plan to keep the car for many years, buying tends to win on total cost; if you like switching cars every few years, leasing is often more convenient.
  • For finer-grained scenarios, the companion auto loan calculator and car lease calculator pages let you adjust each set of inputs independently.

Frequently Asked Questions

There's no single answer — it depends on whether you value a lower monthly payment or owning the car outright after the term ends. Weigh total cost alongside ownership and any mileage restrictions before deciding.

Leasing assumes you'll return the vehicle at the end of the term, so you only pay off the price minus the expected residual (resale) value. Buying with a loan requires repaying the full vehicle price, which explains the difference in total cost.

The down payment reduces the financed amount for both options. However, the trade-in value only applies to buying, and the residual value rate only applies to leasing, so each is reflected independently in the estimate.

Typical car lease contracts run up to about 7 years, so this tool limits the term to a range of 1-7 years for both options to keep the comparison fair.

This tool provides a rough estimate only. Actual interest rates, residual value rates, and fees vary based on the lender's or leasing company's screening conditions, so be sure to get quotes from multiple providers before signing.
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Side Note — Buy vs Lease: Whether an Asset Remains in Your Hands

Financing a car purchase with an auto loan and leasing a car both let you drive the same vehicle, yet the money flows in fundamentally different ways. With a loan, you borrow the full vehicle price and repay it over time, so once it's paid off, the car is entirely yours. With a lease, you only pay off the portion of the price left after subtracting the vehicle's expected residual value at the end of the term, which lowers your monthly payment but means no asset remains in your hands when the contract ends.

This difference shows up clearly as a trade-off between total cost and monthly payment. Comparing the same vehicle price and interest rate, leasing skips paying for the residual portion so the monthly payment is lighter than buying, but because the car must be returned, the real cost can't be judged from the raw numbers alone. That's why leasing tends to suit people who like switching to a new car every few years, while buying suits those who plan to keep the same car for a long time.

Residual value rates are set by automakers and leasing companies based on historical used-car market data, and popular models with strong resale value tend to get higher residual rates, which lowers the monthly payment. Conversely, if the residual rate turns out to have been set higher than the vehicle's actual market value, you may owe an additional settlement at the end of the lease, so it's worth asking about the basis for the residual rate when you get a quote.

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