A worked example
A $20,000 item leased at $350 a month for 36 months costs $12,600 total. Buying with a $2,000 down payment and a 7% loan, then reselling for an estimated $9,000 after the same 3 years, nets out to about $5,831 — making buying roughly $6,769 cheaper here, mainly because you keep a resellable asset.
Frequently asked questions
Why does resale value matter so much in this comparison?
Buying leaves you owning something with real value at the end — leasing leaves you with nothing. Subtracting the resale value from the buying cost is what makes the comparison fair, since otherwise buying would look artificially expensive.
Is leasing ever the financially better choice?
It can be for items that depreciate fast or that you'd want to upgrade frequently, since you're only ever paying for the depreciation during your use period — not the full asset value. For items that hold value well, buying often comes out ahead.
Does this apply to things besides cars?
Yes — the same lease-vs-buy logic applies to equipment, machinery, or any asset where both financing and leasing options exist. For car-specific lease payment math (money factor, residual value), see the Auto Lease Calculator instead.
This calculator provides general estimates only and is not financial advice. Actual resale values are never guaranteed.