Lease or Buy a Car: One $35,000 Example Over 3 Years
Lease vs buy on one $35,000 car over 3 years, with the net cost of each.
Leasing and buying are hard to compare because the payments look so different. Putting both on the same 3-year timeline makes it clearer. All figures below are rounded examples.
The example
A $35,000 car.
| Lease | Buy with a loan | |
|---|---|---|
| Upfront | $3,000 due at signing | $5,000 down |
| Monthly | $400 for 36 months | $594 ($30,000 at 7% for 60 months) |
| Paid in 3 years | $17,400 | about $26,400 |
| Car value at 3 years | not yours | about $19,250 (55% of price) |
| Loan still owed | none | about $13,270 |
| Net cost after 3 years | $17,400 | about $20,400 |
What the table shows
Over the first 3 years, leasing costs less in this example, and you hand the car back. Buying costs more up front, but after the loan ends the payments stop while the car still has value. People who keep cars 6-10 years usually come out ahead buying.
When leasing can make sense
- You drive under the mileage limit (often 10,000-12,000 miles a year).
- You want a new car every few years anyway.
- The lease has a low money factor and little due at signing.
Watch the extras
Excess mileage fees, wear-and-tear charges at return, and gap insurance all change the result. Ask for the money factor, residual value and all fees in writing before signing.
Free tools
- Lease vs buy car calculator: https://smartbudgetsheets.surge.sh/calculators/lease-vs-buy-car-calculator/?utm_source=nostr
- Car lease calculator: https://smartbudgetsheets.surge.sh/calculators/car-lease-calculator/?utm_source=nostr
- Auto loan calculator: https://smartbudgetsheets.surge.sh/calculators/auto-loan-calculator/?utm_source=nostr
- Debt Payoff Planner, up to 8 debts (Payhip): https://payhip.com/b/PtBLU?utm_source=nostr
- 42 free budget templates, pay what you want ($0 is fine): https://smartbudgetsheet.gumroad.com/l/ngpkrb?utm_source=nostr
General information, not financial advice. Figures are rounded examples.
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