Lease vs Buy Calculator
Compare a lease against financing the same car over the same term — with the equity you keep counted properly.
✏️ These numbers were filled in from a shared link — change anything to make it your own.
How each side is calculated
Lease. You pay for the depreciation you use, plus a finance charge:
payment = (cap cost − residual) ÷ term + (cap cost + residual) × money factor
At the end you hand the car back with nothing to show for it — which is why the lease total is simply drive-off plus every payment.
Buy. You finance the same negotiated price over the same term, so the loan is paid off when the lease would have ended. Then you still own the car:
net cost = down payment + all payments − the car's resale value
That final subtraction is the whole argument for buying. Leave it out — as most lease-vs-buy comparisons quietly do — and buying always looks worse than it is.
Curious what the car costs you regardless of how you pay? Run the True Cost to Own Calculator. Financing details are in the Auto Loan Calculator.
Excludes sales tax treatment (which differs by state for leases), mileage overage charges, wear-and-tear penalties, and disposition or acquisition fees. Residual and money factor are set by the leasing company — get the real ones before signing. General information, not financial advice.
Frequently asked questions
Is it cheaper to lease or buy a car?
Over a single term, leasing usually has the lower monthly payment — you are only paying for the depreciation you use, not the whole car. Over the long run buying is normally cheaper, because at the end you own an asset with real value while a lease leaves you with nothing. This calculator credits that resale value back so the comparison is fair.
What is a money factor?
It is the lease equivalent of an interest rate, expressed as a small decimal. Multiply it by 2,400 to get the approximate APR — a money factor of 0.00292 is about 7%. This calculator takes the APR and converts it for you.
What is the residual value?
The value the leasing company projects the car will have at the end of the lease, set as a percentage of MSRP. It is the single biggest driver of your lease payment: a high residual means the car depreciates less on paper, so you pay less. It also caps what you would pay to buy the car out at lease end.
Why does leasing look better if I always want a new car?
Because the comparison changes. This tool compares one lease term against owning through that same term. If you replace the car every three years regardless, you never reach the years where buying pays off — you just repeat the most expensive part of the depreciation curve. Buying wins mainly when you keep the car well past the loan payoff.