At what point does buying become cheaper than leasing?

On this site's default assumptions, at roughly month 43 — about seven months into a second lease — and the gap grows every month after that, reaching about $7,200 by year six. Those defaults are typical, clearly labeled estimates documented on the methodology page , not live market rates. Enter your own quote in the lease vs buy calculator to see your actual crossing point.

Does leasing ever win over the long run?

Rarely on pure cost, but it can happen when the lease is heavily subsidized — a money factor well below loan rates, or an inflated residual — and you assume strong returns on the invested payment difference. Each of those pushes the break-even later, sometimes past a realistic horizon. The only way to know is to model your specific numbers over your specific horizon.

Why does the comparison assume I lease again when the first lease ends?

Because at month 37 you still need a car. Comparing one 36-month lease against six years of ownership would ignore how you get around for years four through six. Serial leasing — a new lease each term, with each acquisition and disposition fee counted — is the honest apples-to-apples path, and it is how the calculator models the lease side. The simplifying assumptions are spelled out on the methodology page .

How does a bigger down payment change the break-even point?

On the buy side, a larger down payment avoids interest at the loan's 7% APR (the default), while the model assumes invested cash earns 6% — so prepaying the pricier debt modestly favors buying and pulls the break-even earlier. On a lease, a large cap cost reduction mostly just prepays the lease and is money at risk if the car is totaled or stolen early. Direction matters more than magnitude here: down payments shift the break-even by months, not years.

Lease vs Buy Break-Even: Why Your Horizon Decides It

On typical numbers, buying overtakes serial leasing somewhere in years three to six, and the gap widens every year after that. This site's default scenario — documented assumption by assumption on the methodology page — crosses at roughly month 43, with buying ahead by about $7,200 at the six-year mark. If your real horizon is shorter than one lease term, leasing usually wins. The decisive input is not the money factor or the APR: it is how long you actually keep your cars.

Every figure below uses the site's defaults: a $45,000-MSRP car negotiated to $42,500, a 36-month lease at a 0.00250 money factor and 57% residual, and a 60-month loan at 7% APR. These are editable, clearly labeled estimates of typical terms — not live market quotes. Put your own quote into the lease vs buy calculator and it computes the break-even month for your numbers, not ours.

Why leasing wins early

Three forces work for the lessee in the first years, and all of them are front-loaded:

Lower monthly outflow. The default lease runs $640.84 a month against an $870.76 loan payment — $229.92 a month stays in the lessee's pocket for as long as both are paying.
The invested difference. The model invests that $229.92 gap at the assumed 6% annual return, so both paths deploy identical cash. Early on, that compounding balance is a real asset on the lease side of the ledger.
No equity trapped in a depreciating asset. The buyer's payments build equity, but in the first years that equity is shrinking underneath them — on the default curve the car sheds 20% of its value in year one alone.

A lease charges you only for the slice of depreciation you use. Of the default $598.92 pre-tax payment, $431.81 is pure depreciation — adjusted cap cost of $41,195 minus the $25,650 residual, spread over 36 months — and $167.11 is the rent charge. The buyer absorbs the same steep early depreciation plus interest on a much larger balance. If those terms are unfamiliar, how car lease math works walks through every line of the payment.

Why buying wins late

The buyer's advantages arrive on a delay, and then they never stop. At month 60 the loan ends: in year six the buyer pays for maintenance and nothing else, while the serial lessee keeps writing checks — $870.76 × 12 is roughly $10,449 the buyer does not spend that year. At the six-year horizon the buyer also owns an asset worth about $15,086 on the default depreciation curve, and that resale value counts as recovered cash.

The lease side, meanwhile, resets its fees every cycle. Lease #2 starts at month 37 with a fresh $695 acquisition fee capitalized into the payment; each turn-in triggers a $395 disposition fee; and every mile over the allowance bills at $0.25 (see mileage and fees for how those add up). In the default scenario the cumulative-cost lines cross at about month 43 — only seven months into that second lease — and buying finishes year six roughly $7,200 ahead. Every additional year of ownership widens the lead, because a paid-off car costs maintenance while a lease always costs a payment.

What moves the break-even point

The money factor vs APR spread

Multiply the money factor by 2,400 to get its implied APR: the default 0.00250 is about 6.0%, one point below the default 7% loan. A subsidized money factor widens that spread and pushes the break-even later; cheap loan rates narrow it and pull the break-even earlier. Compare your two quotes directly — the auto loan calculator shows total interest on the buy side.

The depreciation curve and residual

Steep depreciation cuts the buyer's resale equity, delaying the break-even. But note the asymmetry: if the lessor sets a generous residual on a fast-depreciating car, the lessee gets a subsidy — someone else eats the value loss. A residual set above the car's realistic future value is one of the few genuine lease bargains.

Down payment

Cash down avoids loan interest at 7% while the model's invested cash earns an assumed 6%, so a larger down payment modestly favors buying and moves the break-even earlier. On a lease, a big cap cost reduction is prepayment that can vanish if the car is totaled early.

The investment return assumption

Invest-the-difference is what makes the comparison fair, and the assumed return is a genuine lever: a higher rate rewards whichever path spends less per month — leasing, early on — and pushes the break-even later. Set it to 0% and the model becomes a plain cash comparison, which flatters buying. The 6% default and its rationale are on the methodology page.

Reading the chart

The calculator's chart plots cumulative net cost for each path: every dollar paid to date, minus the car's current resale value on the buy side, minus the balance of the invested monthly difference. That last piece matters — without it, the cheaper payment looks better than it is, because the comparison would quietly let one path spend less total money. The break-even is simply the month the buy line drops below the lease line. Full formulas, defaults and simplifications are documented on the methodology page, with a worked example you can check by hand.

The honest self-assessment

The break-even math is only as good as the horizon you feed it, and most people feed it an intention rather than a track record. If you have replaced your last three cars every three years, model a three-year horizon — not the ten years you plan to keep this one. At the default break-even of 43 months, the difference between "I'll keep it for a decade" and "I actually trade at 36 months" flips the answer entirely. Look at your actual replacement habit, pick the horizon it implies, and let the lease vs buy calculator settle the rest.

The Break-Even Horizon: Why How Long You Keep the Car Decides Everything