Free lease vs buy car calculator. Compare total lease cost against buying with a loan, including residual value, money factor, fees and equity.
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This calculator compares leasing against buying with a loan over the same horizon: your lease term. The lease side uses the standard lease formula: monthly payment = (cap cost minus residual) divided by term, plus (cap cost plus residual) times the money factor, then adds the down payment and the acquisition and disposition fees. The buy side amortizes a loan on the same vehicle, then subtracts your equity at the end of the horizon: expected resale value minus the remaining loan balance. Whichever net cost is lower wins. The comparison is honest about the time frames, because leasing is usually compared over the lease term while a loan keeps running. Results are planning estimates, not financial advice.
Monthly lease payment = ((cap cost - residual) / term) + ((cap cost + residual) × money factor). Cap cost is the negotiated price minus your down payment. Residual is the contracted end value, usually 50 to 60% of MSRP at 36 months. Money factor × 2400 = APR. Worked example from this page's defaults: $35,000 car, $2,500 down, 36 months, 0.00175 money factor, 60% residual. Cap cost $32,500, residual $21,000. Depreciation part: ($32,500 - $21,000)/36 = $319.44. Finance part: ($32,500 + $21,000) × 0.00175 = $93.63. Monthly payment $413.07 before tax. Total lease cost: $2,500 + $413.07 × 36 + $595 acquisition + $350 disposition = $18,315.50.
The buy side amortizes a loan on the same car, then compares over the same horizon as the lease. Loan monthly = P × r(1+r)ⁿ / ((1+r)ⁿ - 1). On the example above at 6.5% APR over 60 months on $32,500, the loan payment is $635.90. After 36 payments the remaining balance is about $14,263, so with an expected resale of $20,000 the buyer holds $5,737 in equity. Buy net cost = down + 36 loan payments - equity = $2,500 + $22,892 - $5,737 = $19,667. Against the lease total of $18,316, leasing wins this 3-year horizon. Stretch the horizon or raise the resale value and buying takes the lead.
Money factor is the lease interest rate: 0.00175 × 2400 = 4.2% APR, and it is negotiable. Residual is set by the lender, higher residuals mean cheaper leases because you pay less depreciation. Fees are fixed costs many shoppers forget: acquisition $595 to $1,095, disposition $300 to $500, plus a mileage penalty of $0.15 to $0.30 per mile over the allowance. A cheap-looking monthly payment with a marked-up money factor and low residual is the classic dealer trap; this calculator exposes all three. Two more checks: a credit score above 720 typically unlocks the best money factors, so know your score before you negotiate, and confirm whether gap insurance is included, since most leases bundle it but you need to verify rather than assume.
Lease if you drive 8,000 to 12,000 miles a year, want a new car every 3 years, value predictable repair costs, or can deduct payments for business use. Buy if you drive 15,000+ miles a year, keep cars 7+ years, want to modify the car, or want to end up payment-free with an asset. EVs deserve their own run: fast depreciation and improving tech often favor leasing, while tax credits can favor buying. Enter your real numbers rather than deciding on vibes. Is leasing a waste of money? Not inherently: the disadvantages of leasing are real, no equity, mileage limits, perpetual payments, but for drivers who want a new car every few years with warranty coverage throughout, it is a rational way to buy transportation instead of metal. And if your lease is ending with market value above the residual, a lease buyout lets you capture that equity instead of handing it back.
A full lease vs buy analysis looks beyond the monthly payment. The break-even year is the point where cumulative buying costs drop below cumulative leasing costs: with typical numbers that happens around year 4 to 6, because the loan ends but the lease never does. Opportunity cost matters too: the $5,000 you keep by leasing instead of a big down payment, invested at 7 percent for 5 years, grows to about $7,013, which narrows the gap. Money factor to APR conversion is simple: multiply the money factor by 2400, so 0.00175 becomes 4.2 percent, and always compare that against the loan APR. Electric cars deserve their own total cost of ownership run: rapid EV depreciation and improving battery tech often favor leasing, while purchase tax credits can favor buying. This auto lease calculator handles all of it: enter your numbers for each scenario and compare the bottom lines.
At lease end you have three moves. Return the car: pay the disposition fee plus any mileage or wear charges and walk away. Buy it out at the contract residual: smart when the market value is above the residual, since you capture the equity. Trade it in: the dealer pays off the residual and applies any positive equity to your next car. Check used listings for your exact model before the return date so you know which move wins.
It depends on your horizon and habits. Leasing usually wins for 2 to 3 year horizons with low mileage and a desire for a new car often. Buying usually wins for 5 plus year horizons, high mileage, or when you want an asset with no payment at the end. Run your own numbers above, since residual value and money factor decide most cases.
The money factor is the lease's interest rate in disguise. Multiply it by 2400 to get the equivalent APR: a money factor of 0.00175 equals 4.2% APR. Dealers sometimes mark it up, so always convert and compare it against loan APRs.
Around 0.00100 to 0.00175 (2.4 to 4.2% APR) is typical for prime buyers on supported models. Near 0.00250 (6%) suggests a markup or weaker credit, and above 0.00333 (8%+) is expensive. You can negotiate the money factor just like a loan rate.
Higher is better for the lessee, because you only pay the depreciation. Typical 36-month residuals are 50 to 60% of MSRP for mainstream brands like Toyota and Honda, 45 to 55% for luxury cars. A high residual with a low money factor is the recipe for a cheap lease.
Monthly lease = ((cap cost - residual) / term) + ((cap cost + residual) × money factor), plus tax. The first part is depreciation, the second is the finance charge. Example on this page's defaults: ($32,500 - $21,000)/36 + ($32,500 + $21,000) × 0.00175 = $319.44 + $93.63 = $413.07 a month.
Acquisition fee ($595 to $1,095) at signing, disposition fee ($300 to $500) at return, excess mileage charges ($0.15 to $0.30 per mile over the allowance), and excess wear charges. This calculator includes the acquisition and disposition fees in the total.
Three options: return the car and walk away (paying the disposition fee plus any mileage or wear charges), buy it at the residual value stated in the contract, or trade it in toward a new lease. If the market value is above the residual, buying it out or trading it captures that equity.
Buy it out if the car's market value is above the residual value in your contract, since you capture the difference. Hand it back if the market value is below the residual. Compare the residual against current listings for the same car before deciding.
You pay per-mile overage charges, typically $0.15 to $0.30 per mile. On 5,000 extra miles at $0.25, that is $1,250. If you drive 15,000+ miles a year, buying is usually cheaper than paying overages for years.
Yes, but it is expensive: early termination fees often equal several remaining payments, or you can transfer the lease to someone else through a lease-swap marketplace, or buy out the car and sell it. Read the early-termination clause before signing.
As little as possible. A down payment lowers the monthly payment but does not lower the total cost much, and if the car is totaled or stolen, you lose the down payment. Keep cash for the drive-off fees and put the rest toward the monthly payments.
Often yes. Lease payments on a business-use vehicle are generally deductible in proportion to business use, which is simpler than depreciating a purchased car. If the car is used mostly for business, run the after-tax numbers, since the deduction can flip a close comparison.
Because that is the decision you actually face: what happens over the next 3 years. Comparing a 36-month lease against a 60-month loan's full cost is apples to oranges. This calculator puts both options on the lease-term horizon and credits the buyer with equity: resale value minus the remaining loan balance at that point.
When you keep the car 6+ years, drive high mileage, get a low loan APR, or the car holds its value well. The equity math is decisive: after the loan is paid off you own an asset worth thousands, while the lessee owns nothing. Test the long-hold scenario by raising the expected resale value.
See your monthly car payment, total interest and true cost before you sign.
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