Lease vs Buy Car Calculator

Compare the true total cost of leasing vs buying a car — including taxes, fees, depreciation, and residual value.

Vehicle Price (MSRP / Negotiated Price)

Please enter a valid vehicle price.

Sales Tax Rate (%)

Annual Miles Driven

Lease Term (months)

Money Factor (e.g. 0.00125)

Residual Value (%)

Cap Cost Reduction (Down Payment)

Acquisition Fee

Disposition Fee (end of lease)

Excess Mile Charge (¢/mile)

Lease Allowed Miles/Year

Loan Term (months)

Loan APR (%)

Down Payment

Trade-In Value

Dealer / Doc Fees

Annual Depreciation Rate (%)

Comparison Period (years)

Enter a value between 1 and 20.

Lease Total Cost

Buy Total Cost

Cost Breakdown — Lease

Cost Breakdown — Buy

Detailed Summary

Year-by-Year Comparison

Year	Lease Cumulative	Buy Cumulative	Difference

How to Use This Lease vs Buy Car Calculator

Enter the vehicle price, your local sales tax rate, and annual miles driven — these apply to both scenarios. Then fill in the Lease tab (money factor, residual %, fees) and the Buy tab (loan APR, down payment, depreciation rate). Set your comparison period and hit Calculate to see which option costs less over time.

The calculator outputs total costs for each path, a monthly payment estimate, a visual cost breakdown, and a year-by-year cumulative table so you can see exactly when — or if — buying overtakes leasing.

Why This Matters

Choosing to lease or buy is one of the biggest personal finance decisions most people make repeatedly throughout their lives. Get it wrong and you can easily overpay by $5,000–$15,000 over a 5-year period. The choice isn't obvious: leasing typically offers lower monthly payments (often $100–$200 less per month on a $35,000 vehicle), but you build zero equity. Buying costs more upfront and monthly, but after the loan is paid off you own an asset worth real money.

The math gets more complex when you consider: excess mileage penalties (at $0.25/mile, driving 3,000 extra miles a year costs $2,250 on a 3-year lease), acquisition and disposition fees that can total $1,300+, the opportunity cost of a large down payment, and the actual resale value of a purchased vehicle after depreciation. This tool accounts for all of those factors so you can make a truly informed decision.

How It's Calculated

Lease Payment:

Adjusted Cap Cost = MSRP − Cap Cost Reduction Residual Value = MSRP × Residual % Depreciation Fee = (Adjusted Cap Cost − Residual) ÷ Lease Term Finance Charge = (Adjusted Cap Cost + Residual) × Money Factor Monthly Lease Payment = (Depreciation Fee + Finance Charge) × (1 + Tax Rate)

Loan Payment:

Loan Amount = Price + Tax + Fees − Down Payment − Trade-In Monthly Rate = APR ÷ 12 Monthly Payment = Loan Amount × [r(1+r)^n] ÷ [(1+r)^n − 1]

Total Buy Cost subtracts the estimated residual value of the vehicle at the end of the comparison period (factoring in annual depreciation), giving you the true net cost of ownership.

Tips & Common Mistakes

Don't ignore the money factor. Multiply it by 2,400 to get the equivalent APR. A money factor of 0.00250 = 6% APR — always compare this to a loan rate.
Watch the mileage limits. Standard leases allow 10,000–12,000 miles/year. If you drive 15,000+ miles annually, leasing often becomes more expensive than buying due to excess mileage penalties.
Factor in all lease fees. Acquisition fees ($700–$1,000) and disposition fees ($300–$500) are real costs often glossed over in dealer ads.
Residual value is key. A higher residual % means lower monthly payments. Brands like Honda and Toyota historically have stronger residual values (55–65%) vs. some luxury brands (40–50%).
Don't put a large down payment on a lease. Unlike a purchase, that money isn't recoverable if the car is totaled or stolen early in the lease term.

Frequently Asked Questions

Is it always cheaper to buy a car than to lease?

Not necessarily. Over short periods (2–3 years), leasing can be cheaper because you avoid large depreciation hits and keep monthly payments low. Buying typically wins over longer horizons (5+ years) once the loan is paid off and you own an asset. The break-even point depends heavily on the specific deal terms and how long you keep the vehicle.

What is a money factor and how does it affect my lease payment?

The money factor is essentially the interest rate on a lease, expressed as a small decimal. Multiply it by 2,400 to convert to an approximate APR. For example, a money factor of 0.00150 equals 3.6% APR. A lower money factor means lower monthly payments, so always negotiate it alongside the selling price and residual value.

How accurate is the depreciation estimate for the buy scenario?

The calculator uses a fixed annual depreciation rate you enter (default 15%), applied to the remaining value each year (compound depreciation). Real-world depreciation varies significantly by brand, model, condition, and market demand. New vehicles typically lose 15–25% in year one and 10–15% per year afterward. Check Kelley Blue Book or Edmunds for model-specific data to refine your estimate.

Should I include a down payment on a lease?

Financial experts generally advise minimizing or avoiding down payments (cap cost reductions) on leases. While they lower your monthly payment, the savings are spread over the lease term — and if the car is totaled or stolen, you typically lose that money. It's usually better to put that cash in a savings account and use it to offset monthly payments as needed.