Financial Calculators

Lease vs Buy Car Calculator

Compare the total costs of leasing a vehicle vs buying with a loan. Get a clear recommendation based on depreciation and residual values.

Formula Verified & Maintained by:David Miller, CPA

CPA, M.S. Finance (NYU Stern) • Lead Financial Analyst & Tax Technology Editor

Peer-Reviewed AlgorithmAudited for 2026 Rules

Interactive Calculator

1. Provide Details

Car Purchase Price ($)

Comparison Term (Months)

Lease Down Payment ($)

Lease Monthly Payment ($)

Loan Down Payment ($)

Loan Interest Rate (%)

Est. Resale Value at End ($)

2. Output Results

Total Cost to Lease17364.00 $

Monthly Buy Loan Payment919.47 $

Net Cost to Buy (incl. Resale)20100.92 $

Financing RecommendationLeasing is estimated to be $2737 cheaper than buying.

How to Calculate: Formula & Steps

Calculates the total cost to lease including monthly lease payments, and compares it to the purchase amortization minus the vehicle's projected resale value at the end of the term.

Formula Used:Lease Cost = Down + (Payment × Term); Buy Cost = Down + (Loan Payment × Term) - Resale Value

Step-by-Step Calculation Example

Leasing a $35k car for 36 months at $399/mo with $3k down costs $17,364. Buying with $5k down and a 6.5% interest loan costs $30,940, but subtracting $18k resale value leaves a net cost of $12,940. Buying is cheaper by $4,424.

Common Mistakes to Avoid

Failing to account for vehicle equity at the end of the loan term, which makes leasing look cheaper than it actually is.

Practical Use Cases

Evaluating dealership car offers
Personal transportation budgeting

Expert Tips

Negotiate the purchase price (capitalized cost) of the car before discussing lease options to lower your monthly payments.

Lease vs. Buy Vehicle Economics: Depreciation, Money Factor & Equity

Deciding whether to lease or purchase a new vehicle comes down to a comparison between short-term monthly cash flow and long-term asset equity after factoring in automotive depreciation curves.

The Total Cost Equations

Total Lease Cost = Down Payment + (Monthly Lease Payment × Lease Term Months)

Net Buy Cost = Down Payment + (Loan Payment × Term Months) - Vehicle Residual Resale Value

Converting Lease Money Factor to APR

Dealership lease contracts specify the finance charge as a Money Factor (Rent Charge) rather than an APR. To calculate the equivalent annual interest rate, multiply the money factor by 2,400 (e.g. a Money Factor of 0.0025 × 2,400 = 6.0% APR).

Disclaimer

This calculation tool is provided for educational and informational estimation purposes only. Results are based on mathematical formulas and user-supplied parameters. They do not constitute formal underwriting, financial, tax, engineering, or legal determinations.

Frequently Asked Questions About Lease vs Buy Car Calculator

Is it better to lease or buy a car?

Buying is generally cheaper in the long run because you build vehicle equity. Leasing is best if you want lower monthly payments and plan to change cars every 2-3 years.

What is car residual value?

The estimated value of the car at the end of the lease term, set by the leasing company.