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Car Buy vs Lease Calculator

Compare buying and leasing the same car over the lease term, with the buy side credited for its resale equity and the lease side ending with nothing, to see which costs less.

Buying and leasing are compared fairly over the same time, the lease term: you add up what each costs, and the buy side gets credit for the car's resale value minus any loan still owed, while the lease ends with nothing to show. This calculator computes the lease payment from the money factor, residual, and price, the loan payment for buying, and the net cost of each, then tells you which is cheaper over the horizon and by how much.

$

The negotiated price, used as the cap cost for the lease and the purchase price for buying.

months

Both options are compared over this period. Common lease terms are 24, 36, and 48 months.

$

Cash down if you buy. Reduces the amount financed.

%

The annual percentage rate on the purchase loan.

months

How long you finance the purchase. If it is longer than the lease term, the buy side carries a remaining balance at the horizon, which is netted against resale value.

%

Used to estimate the car's resale value at the end of the horizon. Cars commonly lose roughly 15 to 20 percent of their value a year.

$

Up-front cash on the lease. Lowers the monthly payment but is money you do not get back.

$

The car's contract value at lease end, set by the leasing company. Often quoted as a percent of MSRP; multiply that percent by the price to get a dollar figure.

Lease quotes use a money factor, which dealers often hide. Choose how you want to enter the lease rate.

If rate type is APR, enter the APR (e.g. 5). If money factor, enter it (e.g. 0.00208). Money factor = APR divided by 2400, so 5 percent APR is 0.00208.

$

A bank fee charged to start the lease, rolled into the cap cost.

$

A fee charged when you return the car at lease end.

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Which is cheaper

Buying costs $1,304 less over 36 months

The lower net cost over the lease term, and by how much. Net cost credits the buy side for resale equity; the lease ends with no asset.

Buy: net cost over the term
$17,735.51
Lease: net cost over the term
$19,039.60
Cost difference
$1,304.10
Buy: monthly payment
$618.65
Buy: equity at term end
$7,535.90
Buy: loan balance at term end
$13,958.48
Lease: monthly payment
$463.60
Lease: depreciation portion
$349.86
Lease: finance (rent) portion
$113.74
Lease: equivalent APR
5.00%
Cumulative cash paid

Assumptions

  • The comparison is total cost over a SHARED horizon equal to the lease term, which is how to compare them fairly. The buy side is credited for end-of-term equity, the estimated resale value minus any loan balance still owed, since you own the car and can sell it. The lease side ends with no asset, so it gets no such credit. This is the standard way to compare buying and leasing.
  • The lease payment is the standard formula: a depreciation fee, (cap cost minus residual) divided by the term, plus a finance fee, (cap cost plus residual) times the money factor. The cap cost is the price plus the acquisition fee minus your cash down. The money factor relates to APR by money factor times 2400, so a 5 percent APR is a money factor of about 0.00208.
  • The buy side is a standard amortizing loan. If the loan term is longer than the lease term, the remaining balance at the horizon is subtracted from resale value to get equity. Resale value is estimated from the annual depreciation rate you enter, using declining-balance depreciation; real resale depends on the specific car, mileage, and condition.
  • Cash flows are added up nominally, with no adjustment for the time value of money. This matches how consumer lease comparisons are usually presented, but a dollar paid later is worth slightly less than a dollar paid today, which this does not capture.
  • NOT modeled, and each can change the result: sales tax (states tax leases very differently from purchases, some on the monthly payment, some on the full price), gap insurance, excess-mileage and wear-and-tear charges at lease end, early termination penalties, and any security deposit. Insurance, fuel, and maintenance are excluded because they are similar whether you buy or lease.
  • One structural point this dollar comparison cannot show: leasing means a permanent car payment, since you start over each time a lease ends, while a bought car can be driven for years after the loan is paid off with no payment at all. Over a long horizon that difference usually favors buying and keeping a car, beyond any single lease term.
  • This is an estimate for educational purposes only, not financial advice and not an offer. Lease terms, money factors, and residuals are set by the leasing company and vary by deal and credit.

How it works

Buying and leasing are only comparable if you measure them over the same time and account for what you own at the end. This calculator compares total cost over a shared horizon equal to the lease term, and credits the buy side for its resale equity while the lease side ends with nothing.

The lease side uses the standard lease formula. The monthly payment is two parts:

  • Depreciation fee: (adjusted cap cost − residual value) / term, the value the car loses over the lease, spread across the months.
  • Finance fee: (adjusted cap cost + residual value) × money factor, the interest portion.

The adjusted cap cost is the price plus the acquisition fee minus your cash down. The money factor is how leases state the interest rate; it relates to APR by money factor × 2400, so a 5 percent APR is a money factor of about 0.00208. The lease’s net cost is your cash down plus every payment plus the disposition fee.

The buy side is a normal amortizing loan. Over the horizon you make payments, and if the loan is longer than the lease term you still owe a balance. Your equity is the car’s resale value minus that remaining balance, because you could sell and pocket the difference. The buy’s net cost is the down payment plus payments made, minus that equity.

Resale value is estimated with declining-balance depreciation from the rate you enter. Cash flows are summed nominally, without discounting.

Worked example

A $35,000 car over 36 months. Buy: $3,000 down, 6 percent APR, 60-month loan, 15 percent annual depreciation. Lease: $2,000 down, $21,000 residual, 0.00125 money factor (3 percent APR), $350 disposition fee.

  • Lease payment: depreciation (33000 − 21000)/36 = 333.33 + finance (33000 + 21000) × 0.00125 = 67.50 = $400.83/mo. Lease net cost: 2000 + 400.83 × 36 + 350 = about $16,780.
  • Buy payment on $32,000 financed: about $618.65/mo. After 36 of 60 payments the balance is about $13,958. Resale at 15 percent a year: 35000 × 0.85^3 = about $21,494. Equity: 21494 − 13958 = about $7,536. Buy net cost: 3000 + 618.65 × 36 − 7536 = about $17,736.
  • Leasing is cheaper here by about $956 over the 36 months. Change the depreciation or residual and the answer can flip.

Scope and limitations

NOT modeled: sales tax (states tax leases very differently from purchases), gap insurance, excess-mileage and wear-and-tear charges, early termination, and security deposits. Insurance, fuel, and maintenance are excluded because they are similar either way. One thing the dollar figure cannot capture: leasing means a permanent car payment, because you start over each lease, while a bought car can be driven payment-free for years after the loan ends. This is an estimate for education, not financial advice.

Sources

Frequently asked questions

Is it cheaper to buy or lease a car?
Over a single lease term, leasing often has the lower monthly payment, but buying frequently wins on total cost because you keep the car and its resale value. This calculator compares both over the same period and credits the buy side for that equity. The honest answer depends on your numbers, and on how long you keep a car after the loan is paid off.
What is a money factor?
It is how leases express the interest rate, written as a small decimal like 0.00208. To convert it to an APR you can compare to a loan, multiply by 2400, so 0.00208 is about a 5 percent APR. Dealers often quote the money factor instead of an APR because it looks small, so converting it is a good way to see the real rate.
Why does buying get credit for resale value?
Because when you buy, you own the car, so at the end of the comparison period you could sell it and recover its value, minus any loan still owed. That recovered equity offsets what you paid. A lease gives you nothing at the end, you just return the car, which is why a fair comparison credits the buy side and not the lease.
Does leasing ever make sense?
It can, if you value a lower payment and always want a newer car under warranty, drive within the mileage limit, and do not mind always having a car payment. The trade-off is that perpetual leasing means you never stop paying and never own anything. If you tend to keep cars for many years, buying is usually cheaper over time.
How is this different from the auto loan and car affordability calculators?
The auto loan calculator finds the cost of one purchase loan, and the car affordability calculator finds how much car your budget supports. This one answers a different question: for a specific car, is it cheaper to buy it or lease it. Use all three together when shopping.

Related calculators

Learn how this works

New to this topic? Our companion guide explains it in plain language: Should You Buy or Lease a Car?

Last reviewed June 2026.