Lease vs Buy Car Calculator

How to use the calculator

Enter the lease quote (MSRP, negotiated price, cap reduction, fees, residual %, money factor or APR, tax rate and term), any expected excess miles, then the purchase price, down payment, loan APR, loan term and what you expect the car to be worth when the lease would end.

What the result means

With these example entries the lease payment is about $556 a month against a $657 loan payment, but after 36 months buying costs less in total because you keep about $24,000 of car value against the remaining loan balance.

Formula and units

Lease: adjusted cap cost = negotiated price + acquisition fee − cap cost reduction; residual = MSRP × residual %. Depreciation fee = (adjusted cap cost − residual) ÷ term; finance fee = (adjusted cap cost + residual) × money factor (APR ÷ 2400 if entered as APR); payment = (depreciation + finance fee) × (1 + tax rate). Total lease cost = cap cost reduction + payment × term + disposition fee + excess miles × fee. Buy: loan = price − down; M = L·r ÷ (1 − (1 + r)^−n) with r = APR ÷ 12 ÷ 100; net cost over the lease term = down + payments made + remaining balance − expected resale value.

Worked examples

36-month lease at MF 0.0025 vs 60-month loan at 6%: MSRP: 40000 USD; Negotiated lease price (capitalized cost): 38000 USD; Cap cost reduction due at signing: 2000 USD; Acquisition fee (capitalized, example): 695 USD; Residual value (from the lease quote): 58 % of MSRP; Lease rate (money factor or APR): 0.0025 MF or %; Sales tax on lease payment (enter your rate): 6 %; Lease term (comparison period): 36 months; Disposition fee at lease end (example): 395 USD; Expected miles over the allowance: 0 miles; Excess mileage charge (example): 0.25 USD per mile; Purchase price including tax and fees: 38000 USD; Down payment when buying: 4000 USD; Loan APR: 6 %; Loan term: 60 months; Expected value of the car at lease-term end (your estimate): 24000 USD; Lease rate entered as: mf.
Example result: Monthly lease payment: $556.07; Total lease cost over the term: $22,413.68; Monthly loan payment: $657.32; Net cost of buying over the term: $18,494.27; Lower total cost over the term: Buying by $3,919.42; Loan balance at the end of the term: $14,830.92.

24-month lease quoted at 4.8% APR vs 72-month loan: MSRP: 32000 USD; Negotiated lease price (capitalized cost): 31000 USD; Cap cost reduction due at signing: 0 USD; Acquisition fee (capitalized, example): 650 USD; Residual value (from the lease quote): 52 % of MSRP; Lease rate (money factor or APR): 4.8 MF or %; Sales tax on lease payment (enter your rate): 7 %; Lease term (comparison period): 24 months; Disposition fee at lease end (example): 350 USD; Expected miles over the allowance: 3000 miles; Excess mileage charge (example): 0.2 USD per mile; Purchase price including tax and fees: 33500 USD; Down payment when buying: 3000 USD; Loan APR: 7.5 %; Loan term: 72 months; Expected value of the car at lease-term end (your estimate): 22000 USD; Lease rate entered as: apr.
Example result: Monthly lease payment: $772.54; Total lease cost over the term: $19,490.87; Monthly loan payment: $527.35; Net cost of buying over the term: $15,466.63; Lower total cost over the term: Buying by $4,024.24; Loan balance at the end of the term: $21,810.27.

Limitations and common mistakes

Residual, money factor, APR, tax rate, fees and resale value are your entries, not market quotes. Tax rules on leases vary (some places tax the cap cost reduction or the full price); enter the treatment that applies to you. Insurance, maintenance, registration, lost interest on cash paid up front and the value of keeping the car after the term are not modeled. Monthly payment shows affordability; the totals show cost.

Comparing only monthly payments. A lease payment is usually lower, but at the end of the term the buyer still owns a car worth more than the remaining loan balance.

Sources and assumptions

Method LEASE-VS-BUY-CAR-1.0; last formula review 2026-11-04. Sources and their supported claims. Calculation methodology.