The negotiated price
Your state and local rate
Lease
Before tax
Down payment and fees, not the payment
Disposition fee, if any
Buy with a loan
A year
More options· 5-year loan, worth 55% after 36 months
As a share of the price: check what similar used cars sell for
Leasing costs less over 36 months
$349
Leasing costs $20,680. Buying costs $21,029 once you count the car’s value, less the loan you’d still owe.
- Lease payment with tax
- $480
- Loan payment
- $632
- Your equity then
- $5,216
What this means
Leasing pays for the part of the car’s value you use up, plus interest, so the monthly payment is lower. Buying costs more each month, but at the end of the lease term you own part of a car worth $19,250, with $14,034 still to pay on the loan.
Buying usually wins the longer you keep the car: once the loan is paid off, you drive for just the running costs. Leasing can suit you if you want a new car every few years, drive less than the lease’s yearly miles limit, and would rather not deal with selling.
Over 36 months
| Lease: due at signing | $3,000 |
| Lease: 36 payments with tax | $17,280 |
| Lease: end-of-lease fee | $400 |
| Leasing costs | $20,680 |
| Buy: down payment and loan payments | $26,244 |
| Less what the car is worth | -$19,250 |
| Plus the loan still owed | $14,034 |
| Buying costs | $21,029 |
What each really costs
Assumptions in this estimate
- Both are compared over the 36 months of the lease. Buying counts what you’ve paid, less what you’d get if you sold the car then and cleared the loan.
- Sales tax is charged on each lease payment and on the full price when you buy, as in most states. A few states tax a lease differently: on all the payments up front, or on the car’s full price.
- Lease mileage limits are usually set per year; going over costs extra for each mile, and wear beyond the normal can add charges when you hand the car back. Neither is included.
- Insurance, fuel and maintenance are left out, as they’re much the same either way, although a lease may need higher insurance cover. Interest you could earn on the down payment isn’t counted.