Should you lease or buy? This lease vs buy calculator compares both options on the same car over the same period. It works out your lease payment from the price, residual value and money factor, and compares the total lease cost with the net cost of buying, which subtracts the equity you would own at the end.
- Lease monthly payment $0
- Total lease cost $0
- Loan monthly payment $0
- Paid while buying $0
- Your equity at lease end $0
- Net cost of buying $0
Both options are compared over the lease term. Net cost of buying = money paid minus your equity (car value minus loan balance). Excludes insurance, fuel and maintenance, which are similar either way.
How the Lease Payment Is Calculated
A lease payment has two parts. The depreciation charge is the capitalized cost (price minus amounts paid at signing) minus the residual value, divided by the number of months. The finance (rent) charge is the capitalized cost plus the residual value, multiplied by the money factor. Most states then add sales tax to each monthly payment.
| Lease term | Definition |
|---|---|
| Capitalized cost | The negotiated price of the car, reduced by any cap cost reduction (down payment) |
| Residual value | The car's projected value at lease end, set by the leasing company as a percentage of MSRP |
| Money factor | The lease interest rate as a decimal; multiply by 2,400 for an approximate APR |
| Acquisition and disposition fees | Fees at the start and end of the lease |
How Buying Is Compared
For buying, the calculator adds your down payment and the loan payments made during the lease term, then subtracts your equity: what the car is worth at that point minus what you still owe. That shows the real cost of buying over the same period, because you keep an asset that the lessee does not.
What Usually Decides the Winner
- How long you keep the car: leasing can be competitive over 2–3 years; buying usually wins if you keep the car 5 years or more.
- Residual value and money factor: a high residual and low money factor make leases cheaper.
- Resale value: cars that hold value strongly favor buying.
- Miles driven: lease excess-mileage fees can change the result.
- Incentives: manufacturer lease deals or 0% financing can tilt the math.
Related guides: read lease vs buy a car, learn how a car lease works, and see whether you can lease with bad credit.
Lease vs Buy Calculator FAQ
Is It Cheaper to Lease or Buy a Car?
Leasing often has lower monthly payments, but buying and keeping a car is usually cheaper over the long run because you keep its value. The calculator compares both over the same period.
How Is a Lease Payment Calculated?
It is the depreciation charge, which is capitalized cost minus residual value divided by the months, plus the rent charge, which is capitalized cost plus residual multiplied by the money factor, plus tax.
What Is a Good Money Factor?
Lower is better. Multiply the money factor by 2,400 to compare it with a loan APR; for example, 0.00250 is about 6%.
What Is Residual Value on a Lease?
The projected value of the car at the end of the lease, set by the leasing company. A higher residual means lower lease payments.
Does the Calculator Include Insurance and Fuel?
No. Those costs are usually similar whether you lease or buy, so the comparison focuses on the costs that differ.
Can I Buy My Car at the End of a Lease?
Usually yes, for the purchase option price in your lease contract.