Lease vs Buy a Car: Which Costs Less Over 6 Years?

Leasing or buying the same car — which costs less? Over six years, on the calculator's own worked example, buying a $35,000 car costs about $29,399 in total, or $408 a month, while leasing the same car costs $35,676, or $495.50 a month. Leasing costs about $6,277 more over the six years — and at the end of it, the buyer still owns a car whose value was already credited back, while the lessee owns nothing and faces another lease.

That headline is not a universal rule, and the article does not pretend otherwise: the winner flips with the horizon, the resale value, the lease terms and the repair bills. The tool recommended here — Asad Webs' free Lease vs Buy Calculator — costs both sides over exactly the same horizon with your own figures, including the equity rule that most lease-versus-buy arguments get wrong.

How the comparison is counted, fairly

The first rule of an honest lease-versus-buy comparison is that both sides must be costed over exactly the same horizon — the period you will actually keep driving a car. A three-year lease compared with a ten-year ownership is not a comparison, it is two different lives. The calculator takes a horizon in years and costs both sides over precisely that period, which is what makes the verdict meaningful.

The buy side adds the down payment, every loan payment that falls inside the horizon, and maintenance and repairs for every horizon year, then credits back what the car returns you at the end. The lease side repeats leases back-to-back until the horizon is covered: the number of leases is the horizon in months divided by the lease term, rounded up. Every lease you start charges its due-at-signing amount in full, plus the monthly payment for the months actually used. Disposition and wear fees are charged only on leases that run to their end inside the horizon — a final lease cut short by the horizon charges signing plus months used and no end fees, because it has not ended.

Insurance is assumed the same on both sides and left out of both totals, and tax, registration and fuel are likewise outside the model. One real exception to the insurance assumption: some leases require higher liability limits or gap cover than you would choose as an owner. If that applies to you, add the yearly difference to the lease side — the tool's own guidance suggests raising the wear-charge estimate by that amount as the practical way to include it.

A worked example: the $35,000 car over six years

Take the calculator's own worked example, because every number in it is checkable. A $35,000 car kept for six years. Buying: $5,000 down leaves a $30,000 loan at 6% APR over 60 months, which is $579.98 a month; 60 payments come to $34,798.80, maintenance at $600 a year adds $3,600, and the car resells at 40% of its price — $14,000 — with the loan long finished, so the full amount is credited back. Buy total: $5,000 + $34,798.80 + $3,600 − $14,000 = about $29,399, or $408 a month.

Leasing: $429 a month, $1,999 due at signing and a $395 disposition fee on a 36-month term means two leases in six years: 2 × ($1,999 + $429 × 36 + $395) = $35,676 exactly, or $495.50 a month. Leasing costs about $6,277 more over the six years — and at the end the buyer still owns the car whose value was already credited. The gap is not a rounding error; it is the price of always driving a new car, paid twice over in signing amounts and disposition fees, with no asset at the end.

Notice what the buy side does not count: loan payments after the horizon. The 60-month loan finishes inside the six-year horizon, so all 60 payments count and the full $14,000 resale is credited. Try a shorter horizon than the loan term in the tool and the rule changes: only the payments inside the horizon count, and the credit is your equity — resale minus the loan balance still owed — with a warning explaining it. That equity rule is the detail most back-of-envelope comparisons miss, and it is the detail that decides short-horizon verdicts.

Why the buy side is credited with equity, not the full resale

If the loan is still running when you sell, the lender gets paid first. Sell a car for $17,500 with $13,086 still owed and you pocket $4,414 — that pocketed amount, your equity, is the honest credit. Once the loan is finished the balance is zero, so the credit becomes the full resale value automatically. Crediting the full resale while the loan is still running would count money you never receive, and it flatters buying exactly where buying is weakest: short horizons, where the loan is barely paid down and the car has already lost its steepest value.

The same honesty applies to the lease side's final lease. A four-year horizon on 36-month leases is one full lease plus a second lease costed at 12 months with no end fees: you pay the second signing amount in full, plus 12 months of payments, and no disposition or wear fee, because that lease has not ended. Counting a full second lease's fees on a horizon that never reaches its end would overstate leasing costs just as surely as crediting full resale overstates buying. The calculator's rules on both sides exist to stop the comparison from being rigged by its own arithmetic.

When leasing actually wins

On most like-for-like numbers, buying wins if you keep the car past the loan term, because the payments stop while the car keeps its value. Leasing tends to win only in specific situations, and the calculator settles each one for your figures instead of the general rule. First, short horizons: if you genuinely need a car for two or three years and then want out, a lease's clean exit can beat a purchase's early-sale equity loss. Second, a low money factor with a high guaranteed residual: a lease priced on a strong residual value is, in effect, a subsidised rental, and the numbers can favour it outright.

Third, when the buyer would otherwise face big out-of-warranty repair bills: the buy side carries maintenance and repairs for every horizon year, and a lease car under warranty usually needs far less, which is why maintenance sits on the buy side only. An older, high-mileage purchase with a steep repair curve can lose to a lease on that line alone. Fourth, business use where the lease payment structure suits the tax treatment better than ownership — a question for your own tax adviser, since the calculator deliberately excludes tax from both sides rather than guessing at it.

Against those, weigh the lease's hidden costs honestly in the inputs: the due-at-signing figure must include everything handed over before driving away — the first monthly payment if collected up front, any down payment or capitalised-cost reduction, the acquisition fee and dealer fees. Lease adverts often headline a low monthly payment propped up by a large signing amount, and putting the real total in the signing figure is what makes the comparison honest. Excess-mileage and wear charges belong in the per-lease figure too, at your best estimate, because a lease priced without them is a lease priced for a driver who never drives.

The same payback discipline that governs the rest of a money decision applies here: compare totals over the same horizon, credit only money you actually receive, and let the calculator's verdict follow your figures, not a slogan. If you are costing a business purchase more broadly, How to Calculate Your Break-Even Point shows the same payback thinking applied to units and revenue, and How to Calculate Your Freelance Hourly Rate shows how a rate must cover its own costs before it earns anything — the same logic, applied to a car instead of a career.

Frequently Asked Questions

Sources: Asad Webs Lease vs Buy Calculator tool page (counting rules, worked $35,000 six-year example, equity example of $17,500 resale with $13,086 owed, insurance exception, due-at-signing definition — verified live 2026-11-04); Asad Webs break-even and freelance-rate guides linked in the text. Lease arithmetic recomputed: 2 × ($1,999 + $429 × 36 + $395) = $35,676; buy arithmetic recomputed: $5,000 + $34,798.80 + $3,600 − $14,000 = $29,398.80.