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Lease vs Buy Calculator

Compare a lease against financing the same car over the same period, counting what you own at the end.

Enter the MSRP and negotiated price to compare leasing against buying over the same period.

The car

MSRP

Sticker price — the residual is a percent of this.

Negotiated price

What you actually agreed to pay.

Comparison period

The lease term. Both options are costed over this.

Sales tax rate

Lease terms

Residual value

Of MSRP, at lease end

Money factor

× 2,400 gives the APR

Cap cost reduction

Lease down payment

Acquisition fee

Disposition fee

Charged when you hand it back

Purchase terms

Down payment

Loan APR

Loan term

Purchase fees

Car's value at the end of the period

What you could sell it for. The lease residual above is a reasonable starting point — it is the leasing company's own estimate.

Estimate. A real-world figure based on the assumptions listed below, which you can change.

How this calculator works

Both options are costed over the **same period** — the lease term — and compared on net cost after accounting for what you still own at the end. Comparing a 36-month lease payment against a 72-month loan payment, as most side-by-side tables do, compares nothing at all.

The lease side uses the standard industry formulas. Your payment has two parts: a depreciation fee, which is the value the car loses spread over the term, and a finance fee based on the money factor. Multiply the money factor by 2,400 to get the equivalent APR — that is how you tell a good lease rate from a bad one.

The buy side runs the loan for the same number of months, then adds back the balance you still owe and subtracts what the car is worth. That is what makes the comparison fair: at the end of a lease you hand the keys back, and at the end of the same period as an owner you have an asset.

The formula

Exactly what happens to your numbers, step by step.

Lease payment

adjusted cap cost = negotiated price − cap cost reduction + acquisition fee
depreciation fee  = (adjusted cap cost − residual) ÷ term
finance fee       = (adjusted cap cost + residual) × money factor
payment           = (depreciation + finance) × (1 + tax rate)

Money factor to APR
```
APR ≈ money factor × 2,400
```
A money factor of 0.0025 is about 6% APR.

Net cost of buying over the same period

net cost = down payment + payments made
         + loan balance remaining
         − car value at the end

A worked example

A $40,000 MSRP car negotiated to $37,000, leased for 36 months at 55% residual and a 0.0025 money factor, versus a 60-month loan at 6%.

What you enter

MSRP / negotiated: $40,000 / $37,000
Term: 36 months
Residual: 55% ($22,000)
Money factor: 0.0025 (≈6% APR)
Value after 3 years: $22,000

The working

Depreciation fee: (37,000 − 22,000) ÷ 36 = $416.67
Finance fee: (37,000 + 22,000) × 0.0025 = $147.50
Lease payment: $564.17
Lease total (36 months): ≈ $20,310
Buy: paid over 36 months: ≈ $25,730
Buy: balance owed at 36 months: ≈ $16,180

Buying costs about $19,900 net; leasing about $20,300

Nearly a wash at these numbers, which is what you would expect when the money factor matches the loan rate. Leasing wins on monthly cash flow; buying wins the moment you keep the car past the lease term, because the payments stop and the asset does not.

Assumptions

Every result here rests on these. Change your inputs and the result changes with them.

Both options cover the same period, and the car is disposed of at the end of it.
The residual value in the lease and your estimate of the car’s worth are separate inputs — the residual is the leasing company’s figure and may be optimistic or pessimistic.
Sales tax on a lease is charged monthly on the payment, which is how most states do it. A few tax the full price up front.
The acquisition fee is capitalised into the lease; the disposition fee is paid at the end.

What this cannot tell you

**Mileage limits are not modelled.** Leases typically allow 10,000 to 15,000 miles a year and charge 15 to 30 cents for every mile beyond. If you drive a lot, that alone can decide the comparison.
Wear-and-tear charges at lease end are not included, and they are not always small.
Gap insurance, maintenance packages and the tax treatment of business use are outside the scope.

Questions people ask

What is a money factor?

The lease equivalent of an interest rate, expressed as a small decimal. Multiply it by 2,400 to get an approximate APR: 0.00125 is about 3%, 0.0025 about 6%. Dealers are not always forthcoming with it, so ask.

Is leasing cheaper than buying?

Per month, usually. Over a long horizon, usually not — because you never stop paying. Leasing tends to win for people who want a new car every three years; buying wins for people who keep cars for a decade.

Can I negotiate a lease price?

Yes, and you should. The capitalised cost is negotiable exactly like a purchase price, and lowering it lowers the depreciation portion of every payment. The residual and money factor are usually set by the leasing company.

What happens if I go over the mileage limit?

You pay per mile at lease end, typically 15 to 30 cents. Ten thousand miles over at 25 cents is $2,500 — enough to overturn the comparison above entirely.

Sources and review

This calculator uses standard arithmetic with no external rules or published rates, so there is nothing to cite beyond the formulas shown above.

Methodology version 1.0.0 · Last reviewed September 6, 2026