Lease vs Buy Calculator
Compare leasing vs buying the same vehicle side-by-side over a 3-year window. The calculator includes monthly payment, total cash out, residual value, mileage overage, and end-of-term position so you see the true cost of each path.
Lease vs Buy Calculator
Side-by-side lease vs purchase comparison with residual equity factored in.
How It Works
Leases pay only for the depreciation during the lease term plus interest (called the money factor). Loans pay the full purchase price plus interest. After 3 years a lease ends with $0 equity; a loan ends with a car worth ~60% of its original price.
How to Use This Calculator
- Enter MSRP, agreed price, and down payment for both scenarios.
- For lease: enter residual percent (typical 50–60% at 36 months) and money factor (multiply by 2400 to get APR equivalent).
- For loan: enter APR and loan term.
- Enter annual miles — leases penalize $0.15–0.30 per mile over the cap.
- The calculator returns total 36-month cost and final-equity position for both.
Worked Example
Reference Table
When leasing vs buying makes more sense. The math swings further toward leasing when manufacturer subsidies (subvented money factors and inflated residuals) are aggressive.
| Scenario | Lease is better | Buy is better |
|---|---|---|
| Drive 8 000–10 000 mi/year | ✓ | |
| Drive 15 000+ mi/year | ✓ | |
| Want new car every 3 years | ✓ | |
| Keep cars 7+ years | ✓ | |
| Need predictable repair costs | ✓ | |
| Want to own an asset / no payment | ✓ | |
| Self-employed — write off vehicle | ✓ (lease deduction) | ✓ (depreciation) |
| Modify the car | ✓ | |
| Hard on cars (kids, dogs, off-road) | ✓ (no excess wear charges) |
Frequently Asked Questions
How is a lease payment calculated?
(MSRP − Residual − Down payment) ÷ Term + ((MSRP + Residual) × Money factor) + Tax. The first part is depreciation; the second is interest. Negotiate both the price AND the money factor — most leases price the money factor 0.5–1.5% above what you qualify for.
What's a good money factor?
For prime credit (700+): 0.00100–0.00200 (equivalent to 2.4–4.8% APR). For subprime: 0.00350+ (8.4%+). Always ask the dealer for the money factor — it's the lease equivalent of APR.
Should I buy out my lease at the end?
Only if the residual is below current market value, which is increasingly common since 2021. Check used-car prices on KBB or CarGurus before deciding. If market value is 10%+ above residual, buy it out — free equity.
Can I get out of a lease early?
Lease transfer services (Swapalease, LeaseTrader) let you transfer the lease to another driver — often the cheapest exit. Otherwise, early termination fees usually equal the remaining payments minus the residual gain, which can be brutal.
Why are leases more popular for luxury cars?
Luxury cars depreciate steeply (especially European). Leasing lets you pay only for the depreciation during the lease term — you don't hold the bag for the long-term value collapse. That's why 60%+ of BMW, Audi, and Mercedes are leased.
