Lease vs Buy Car Calculator
This free lease vs buy car calculator compares the true cost of leasing versus buying a car over the same period. It calculates the lease payment from the money factor and residual value, the loan payment from the APR, adds up everything you spend over the comparison window, and estimates the equity you walk away with if you buy — so you can see which option actually costs less.
Enter your numbers
Lease
Buy
Your results
Enter your numbers to see the verdict.
Side-by-side breakdown
| Item | Lease | Buy |
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Total cost comparison
Estimates only — not financial advice. Assumes a $350 lease disposition fee, straight-line 15%/yr depreciation for the estimated buy value, and no taxes, dealer fees, acquisition fees, maintenance, or insurance. Actual lease quotes will vary.
How to use this calculator
Enter the vehicle price first — both options are priced on the same car. Then fill in the Lease section with the dealer's numbers: down payment, money factor, residual value, lease term, and your expected mileage. In the Buy section, enter your down payment, loan APR, and loan term.
Results update instantly as you type. The two hero numbers show the total cash each option costs over the same comparison period (the lease term). The verdict line calls out the cheaper out-of-pocket option — and the estimated equity you'd walk away with if you buy instead of lease.
Try the key what-ifs: drive more miles and watch excess mileage fees inflate the lease cost, drop the residual value to see lease payments jump, or raise the APR to see the buy side get more expensive.
How it works
Lease payment. The capitalized cost is the vehicle price minus the lease down payment. The residual value in dollars is price × residual %. The monthly payment is the industry-standard formula: (cap cost − residual) ÷ term + (cap cost + residual) × money factor. The first part pays for the car's depreciation during the lease; the second part is the finance charge. To compare the money factor with a loan APR, multiply it by 2400 — a 0.00250 money factor equals about 6.0% APR.
Buy payment. The loan amount is the vehicle price minus the buy down payment, then the standard amortization formula gives the monthly payment: M = L × r × (1+r)n / ((1+r)n − 1), where r is APR ÷ 1200 and n is the loan term in months.
Comparison. Total lease cost = lease down payment + term × monthly payment + a $350 disposition fee (a fixed assumption; actual fees vary by lessor) + excess mileage fees on any miles driven over the allowance. Total buy cost = buy down payment + payments over the same number of months (if the loan term is shorter than the comparison window, only the loan's payments are counted). Equity (estimate) = estimated car value after the comparison period − remaining loan balance. The estimated car value assumes straight-line depreciation of 15% of the original price per year (a rough estimate, not a market forecast).
Assumptions: rates stay fixed, taxes and dealer/acquisition fees are excluded, maintenance and insurance are excluded, and the car is worth exactly the depreciation estimate at the end. All figures are estimates for planning — not financial advice and not a lease or loan offer.
Frequently asked questions
Is leasing or buying a car cheaper?
It depends on how you measure cost. Leasing usually costs less out of pocket over the first 2–3 years because you're only paying for depreciation plus a finance charge, not the whole car. Buying usually costs less in total once you subtract the estimated equity you own at the end. This calculator shows both numbers: total cash spent and estimated net cost after equity.
How do I convert money factor to APR?
Multiply the money factor by 2400 to get the approximate APR. For example, a money factor of 0.00250 equals about 6.0% APR (0.00250 × 2400 = 6.0). Dealers quote leases with money factors, but converting to APR lets you compare the financing cost directly with a loan's APR.
What is residual value?
Residual value is the leasing company's estimate of what the car will be worth at the end of the lease, expressed as a percentage of the vehicle's price. A higher residual means less depreciation during the lease, which lowers your monthly lease payment. For example, a 55% residual on a $35,000 car means it's expected to be worth $19,250 when the lease ends.
Do I build equity when I lease a car?
No. When you lease, you're renting the car for the lease term and you own nothing at the end unless you buy it out at the residual price. When you buy with a loan, each payment builds ownership: once the loan balance is less than the car's value, the difference is your equity, which you keep if you sell or trade the car.
How accurate is this calculator?
The lease payment formula and loan amortization formula are standard published math. Future car value, excess mileage, and fees are estimates, so results are approximate and for planning only. Real lease quotes include taxes, dealer fees, and acquisition fees that this calculator doesn't, so ask your dealer for the full out-the-door numbers before signing.