Lease vs Buy Calculator
Leasing a car against buying it with a loan, over the same term, counting what the car is worth to you at the end.
Result
Buying costs this much more than leasing: $1,694.55
Negative when buying costs lessInsurance, maintenance, taxes and lease-end fees are not included; they can differ between the two.
- Over this term
- Leasing costs less
- Lease payment a month
- $503.61
- Loan payment a month
- $1,134.01
- The lease’s money factor as an APR
- 6%
- Lease: total cost
- $21,129.96
- Buy: total cost less resale
- $22,824.51
- Excess mileage charge
- $0.00
https://calcgallery.com/finance/lease-vs-buy-calculator/
Results are arithmetic estimates based on the values you enter. Rates, fees and terms are set by your lender or provider, and your actual agreement controls what you pay or receive. Confirm important figures with them or with a qualified adviser. Read the full disclaimer
How to use the Lease vs Buy Calculator
- Enter the car's price, the cash you would put down and the term.
- Enter the lease terms, the capitalised cost, the residual value and the money factor or APR, and the car loan's interest rate.
- Enter what the car would sell for at the end, and your mileage if it might exceed the lease allowance. Read which route costs less over the term.
How each side is costed
lease payment = (cap cost − cash up front − residual) ÷ months + (cap cost − cash up front + residual) × money factorlease cost = cash up front + lease payments + excess mileage chargebuy cost = cash up front + loan payments − resale valueThe loan runs for the same term as the lease, so both are compared over the same period. The same cash up front goes into either route. If you enter a discount rate, each payment is valued at what that money would otherwise have earned, which slightly favours the route whose costs come later.
Mileage
A lease allows a set number of miles a year and charges for every mile over at the end. Three thousand extra miles a year over three years at 0.25 a mile is 2,250, often enough to change which route is cheaper. Buying carries no such charge, though more miles lower the resale value, which you can reflect in the resale figure.
What is left out
Insurance, maintenance, registration, sales tax and lease-end fees such as disposition charges are not included. Some differ between leasing and buying, so check them on both quotes. Nothing here says which you should choose. How long you keep a car, and how much you drive, usually matter as much as the arithmetic.
With your numbers
- Lease: depreciation plus finance charge = $503.61 a month; money factor × 2400 = 6% APR
- Lease total = cash up front + 36 payments + excess mileage = $21,129.96
- Buy total = cash up front + loan payments − $21,000.00 resale = $22,824.51
Quick reference
Insurance, maintenance, taxes and lease-end fees are not included; they can differ between the two.
| Example | Buying costs this much more than leasing |
|---|---|
| USD 40,000 car, 36 months | $1,694.55 |
| Same, money factor 0.00125 | $4,259.55 |
| Same, 3,000 miles a year over | -$555.45 |
| Same, lease rate as 6% APR | $1,694.55 |
| Same, compared at 5% a year | $2,953.37 |
| USD 30,000 car, 48 months, nothing down | $2,354.61 |
Common questions about the Lease vs Buy Calculator
- What is a money factor?
- The lease’s interest rate, written in a different form. Multiply it by 2,400 to get the equivalent APR: a money factor of 0.00250 is 6%, and 0.00125 is 3%. Lease quotes often give the money factor rather than a rate, which makes a lease hard to compare with a loan. This page converts it either way.
- Why compare total costs instead of monthly payments?
- Because a lease payment is almost always lower, and that is not the whole story. At the end of a lease you return the car and own nothing. At the end of the loan you own a car worth its resale value. The page takes that value off the cost of buying, so the two are compared on what you actually give up.
- What does the lease payment consist of?
- Two parts. The depreciation charge, the drop from the capitalised cost to the residual value spread over the months. And the finance charge, the capitalised cost plus the residual, times the money factor. In the example they are 361.11 and 142.50, making 503.61 a month.
- Are residual values and money factors negotiable?
- They are set by the lessor. The capitalised cost is often negotiable, like a car’s price, and money factors are sometimes marked up above the lessor’s base rate. This page does not assume any figure. Enter the ones on your quote.