Lease vs Buy Comparison
Enter vehicle, financing, and lease details. The calculator runs both options and shows total cost over the lease term so you can compare like-for-like.
Vehicle & shared inputs
Buy / finance inputs
Lease inputs
Results
About this Lease vs Buy Calculator
Compares the two ways to put a car in your driveway: financing the purchase with an auto loan, or signing a closed-end lease. The buy side uses the standard amortization formula. The lease side uses the industry-standard Money Factor method — depreciation fee plus finance fee — that every U.S. captive lender (Toyota Financial, Honda Financial Services, Ford Credit, BMW FS, etc.) uses to quote retail lease payments.
How It Works
To compare apples-to-apples, both options are evaluated over the same horizon — the lease term length. The buy side accounts for: total paid over the horizon, remaining loan balance at the horizon, and your estimated resale value at the end of the lease term. The net cost = paid + balance − resale. The lease side accounts for: monthly base payment over the term + acquisition fee + any cap-cost reduction (down payment).
- Lease formula: depreciation fee = (cap cost − residual value) ÷ lease term; finance fee = (cap cost + residual value) × money factor.
- Buy formula: standard amortizing monthly payment + opportunity to keep equity in the vehicle at the end of the loan term.
- APR equivalent of a money factor: multiply by 2,400. A 0.0025 money factor ≈ 6.0% APR.
- Excluded: sales tax, registration, lease disposition ($350–500), over-mileage charges ($0.15–0.30/mile), excess wear, GAP.
Tips for negotiating either option
- For a lease: demand the cap cost, residual %, money factor, and lease term in writing. A dealer who won't disclose all four is hiding margin.
- For a buy: get a pre-approval from a credit union or bank before walking into the showroom — never accept the F&I desk's first rate.
- Factor in insurance (typically $1,700/yr per AAA), fuel, maintenance, and registration — the AAA 2025 total cost of ownership averages $965/mo across the U.S.
- If you plan to keep the vehicle past 6 years, buying almost always wins. If you swap cars every 2–3 years for business or warranty, leasing wins.
More Auto Calculators
- Car Loan Calculator — full amortization schedule
- Car Payment Calculator — solve for affordable payment
- Car Affordability Calculator — 20/4/10 rule
- Car Depreciation Calculator — residual value estimator
- Auto Trade-in Calculator
- Lease Buyout Calculator — should you buy your leased car at lease-end?
- Read: Buying vs leasing a car in 2026 (full guide)
Frequently Asked Questions
How does this calculator compare leasing vs buying?
It computes the lease monthly payment using the industry-standard Money Factor method (depreciation fee + finance fee) and the buy monthly payment using the standard amortization formula. Then it shows total out-of-pocket over each term plus the buy path's equity (resale value at lease-term end) so the two options can be compared on a like-for-like total-cost basis.
What is a money factor and how do I find mine?
The money factor is the lease equivalent of an interest rate. Multiply it by 2,400 to get the approximate APR (so 0.0025 ≈ 6.0% APR). Always ask the dealer for the money factor in writing before signing — it is the single most common margin lever they obscure. Typical 2026 money factors for prime credit (FICO 720+) range from 0.0018 to 0.0030 depending on brand.
What is the residual value?
The residual is the lessor's predicted value of the vehicle at lease-end, expressed as a percentage of MSRP. Higher residual = lower lease payment because you only pay for the depreciation (MSRP minus residual). 36-month residuals from Automotive Lease Guide for 2026 model year typically run 55–65% for mainstream brands, 50–58% for luxury, and have inverted to 50–60% for EVs after the §30D / §45W repeal.
Does this include taxes and fees?
The estimate covers the lease monthly base payment + acquisition fee + cap-cost reduction, and the buy monthly payment + down payment. It excludes sales tax (which varies by state — some tax the monthly payment, others the cap cost upfront), title and registration fees, the lease disposition fee (typically $350–500 at lease-end), excess wear-and-tear charges, and over-mileage charges (typically $0.15–0.30 per mile over the contracted limit). Add these line items separately for an apples-to-apples total.
When does leasing actually beat buying?
Leasing tends to win on a six-year basis only when you need a new vehicle every 2–3 years for business or warranty reasons, drive under the lease mileage cap, never plan to keep a vehicle past 5 years, or want to deduct the lease payment as a business expense (where IRC §280F's luxury-auto depreciation caps would penalize a buy). For the median household holding a vehicle 6–8 years, buying the same vehicle and holding it past the loan payoff is materially cheaper — typically by $15,000–35,000 over six years.