BTHE BARATELLI INSTITUTE · Mentoring at Scale
FOR FIRST-TIME BUYERS · YOUNG PROFESSIONALS · BUSINESS-USE BUYERS · PRACTITIONERS

Lease vs buy is a 3-year question and a 10-year question. Most calculators only show one.

Lease wins on the monthly payment. Buy wins on the asset at the end. The trick is the end-of-term math: at the end of a lease you have nothing; at the end of a loan you own a car worth something. Run both side-by-side over 3, 6, and 10 years — with realistic mileage overage, disposition fees, and the resale value of the bought car. Then decide.

3-Year Cost
Head-to-head
6-Year Cost
Two leases vs hold
10-Year Cost
Long-hold reality
Verdict
When each wins
YOUR DECISION
1
Vehicle basics
2
Lease terms
3
Buy terms
4
Use & upkeep
5
Verdict
STAGE 1 OF 5

Vehicle basics

Same MSRP for both paths. The lease pays for the depreciation between MSRP and residual; the buy pays for the whole car and recovers what's left at resale.

Cap cost before any discount. Used for both lease and buy calculations.
$
Actual selling price after dealer discount. Applies to both lease and buy.
$
Applies to monthly lease payments (most states) and to full sale price on buy. NY, NJ, IL have unique lease-tax structures — verify locally.
%
What this tool actually measures. Most lease-vs-buy calculators show you the 3-year monthly payment difference and stop there. That\'s the part the dealer wants you to see. The real question is what happens at the end of 3 years — if you lease again, you\'re on the same depreciation treadmill forever; if you bought, you have a free-and-clear asset and the next 4-7 years are mostly maintenance. The 6-year and 10-year columns are where most of the truth lives.
STAGE 2 OF 5

Lease terms

Residual = what the manufacturer expects the car to be worth at end of lease as a % of MSRP. Money factor = the interest rate, but obscured (MF × 2400 ≈ APR).

36 mo is most common. 24 mo loses on residual %, 48 mo loses on warranty coverage.
36mo typical: 50-60% on mainstream, 55-65% on luxury. 48mo: 40-50%. Higher residual = lower monthly.
%
Multiply by 2400 to approximate APR. MF 0.00200 ≈ 4.8% APR. Top-tier credit: 0.00100-0.00180. Subprime: 0.00350+.
Discouraged on leases — if the car is totaled, you lose this money. Use $0-$2K as default.
$
Standard: 10K, 12K, 15K. Choose realistic, not optimistic — overage charges are punishing.
$0.15-$0.30 typical. Luxury brands: $0.20-$0.30. Mainstream: $0.15-$0.20.
$
Typically $695-$995. Often rolled into the cap cost. Non-negotiable.
$
Charged if you turn the car in and don\'t lease again from same manufacturer. Typical: $350-$500.
$
Usually 1 month payment. Refunded at end of lease — this tool treats it as opportunity cost only.
$
Be honest. Most lessees exceed allowance — usually by 1-3K/yr. The overage compounds.
STAGE 3 OF 5

Buy financing terms

If you buy, you pay tax on the full sale price and finance over a longer term. At the end, you have an asset worth something.

10-20% of sale price is the practitioner range. More puts you above water faster.
$
60 mo is the discipline benchmark. 72/84 mo means years underwater — avoid unless you must.
New-car APR. Tier-1 credit: 3.9-6.5%. Mid: 6.5-9%. Subprime: 9%+.
%
What the car is worth if you sell at year 3. Should track approximately to the lease residual %, but not always.
%
Typically 30-42% on mainstream, 25-38% on luxury (which depreciates harder).
%
15-25% on mainstream, 10-20% on luxury. Long-hold buyers ride the curve flat after year 5.
%
$
STAGE 4 OF 5

Use & upkeep

Insurance and fuel are about equal for both paths (same car). Maintenance differs — lease stays in warranty, buy goes out-of-warranty after year 4-5.

Same vehicle = same premium for both paths. $1,400 mainstream / $2,400 luxury / $4,000+ exotic.
$
Same vehicle, same fuel.
$
Years 1-4: oil, tires, brake pads. Mainstream: $300-500. Luxury: $600-1,200 (premium service).
$
Years 5+. Mainstream: $1,000-1,500. Luxury: $2,500-4,500. Only applies to buy path after year 4.
$
$
STAGE 5 OF 5

Verdict

Lease vs buy side-by-side over 3, 6, and 10 years. The end-of-term math is where most calculators cheat — this one doesn\'t.

RESOURCES THAT MAY HELP

No forms. No follow-up. Just the next thing to read.

Lease vs buy is one of three or four major car decisions. The full first-decade money stack lives in Money Reality (First Job Edition). The athlete version — where leasing is the standard dealer trap — lives in the Athletes\' Wealth Playbook. Here, try these. They may help.

Money Reality (First Job Edition) Athletes' Wealth Playbook All free tools
This is not financial, insurance, or auto-buying advice. Depreciation, insurance, and maintenance costs vary dramatically by vehicle make/model, region, driver age, and history. Verify all numbers with your insurance broker, dealer, and CPA before relying on any output.
WANT THE METHODOLOGY BEHIND THIS TOOL?
This calculator pairs with Money Reality (First Job Edition) and Athletes' Wealth Playbook.
Edmunds, KBB, CarGurus monetize this question as a dealer lead-gen funnel. This is the practitioner version — with realistic mileage overage, end-of-lease disposition, and the resale value of the bought car included in the math. No forms. Just the answer.
For athletes, leasing is the dealer\'s preferred close on a young player\'s first contract. The AWP covers why — and what to do instead.
Read Money Reality (First Job) → Read AWP
PROFESSIONAL DISCLAIMER · PLEASE READ

Educational and informational purposes only. This calculator and any output it produces are intended solely for general educational and decision-support purposes. They do not constitute financial, insurance, tax, legal, or auto-buying advice, and they do not create a fiduciary, broker-client, or advisor-client relationship of any kind.

Estimates based on your inputs. Lease residuals, money factors, sales-tax handling on leases, and the end-of-lease buyout / disposition mechanics vary materially by state, manufacturer, and credit tier. Depreciation, insurance, and maintenance costs vary dramatically by vehicle make/model, region, driver age, and history. Verify all numbers with your insurance broker, the dealer\'s out-the-door + lease-disclosure paperwork, and your CPA before relying on any output.

Consult your own qualified professionals. For business-use lease-vs-buy decisions, §179 / bonus depreciation, §280F luxury caps, and after-tax economics, consult a CPA familiar with current Treasury regulations. The Baratelli Institute is a publisher of practitioner reference material. It is not a registered investment adviser, insurance broker, dealer, or auto-finance company.

Educational references and tools — not legal, tax, accounting, or investment advice, and not a recommendation to buy or sell any security. Consult a qualified professional about your specific situation. © 2026 The Baratelli Institute.