By Meraj Uddin Provat · Last reviewed May 23, 2026 · Editorial Standards
Leasing almost always has the lower monthly payment. That is exactly why the comparison is unfair until you finish it. Buying costs more each month but hands you an asset at the end; leasing hands you nothing. This calculator settles it on net cost over the same period, not on the sticker payment.
Lease vs Buy a Car Calculator
Compares the true cost of leasing versus buying over the same period, counting the equity you keep when you buy. Updates as you type.
Buying is compared over the same months as the lease. Net buy cost = down + payments made + remaining loan balance − the car’s resale value. Leasing leaves no asset. Excludes maintenance, mileage penalties, insurance and tax differences. Estimates only, not financial advice.
How to use this calculator
Fill in the lease side (monthly payment, term, due at signing) and the buy side (price, down payment, loan rate and term, and the car's estimated resale value when the lease would have ended). The tool compares both over the lease term and reports which is cheaper once the resale value you keep by buying is counted.
Why the monthly payment is the wrong comparison
A lease payment only covers the car's depreciation during the lease plus a finance charge — you are renting the most expensive years and giving the car back. A loan payment covers the entire car, so it is higher, but each payment buys equity. Comparing the two payments directly rewards leasing for a reason that has nothing to do with total cost. The honest comparison is: total cash out for leasing, versus total cash out for buying minus the car you still own.
The number that decides it: resale value
Buying wins or loses almost entirely on how well the car holds value. A vehicle that keeps a strong resale value makes buying clearly cheaper, because the equity at the end offsets most of the payments. A vehicle that depreciates hard narrows the gap and can tip it toward leasing. This is why the resale field is the most important input here — change it and watch the verdict move.
What the calculator does not include
Cost is only part of the lease-versus-buy decision. The model deliberately leaves out:
- Mileage penalties — leases charge per mile over the cap; heavy drivers pay a lot at turn-in
- Wear-and-tear charges — lease-end damage fees can be significant
- Maintenance after the warranty — owners keep paying past the lease years; lessees usually do not
- Insurance and tax differences — these vary by state and contract
Leasing's real advantages are non-financial: a newer car more often, no resale hassle, predictable payments. Price the cash gap here, then decide whether that convenience is worth it.
Who each option tends to suit
- Buying — you keep cars a long time, drive a lot of miles, and want the years after the loan with no payment at all
- Leasing — you want a new car every few years, stay within a mileage cap, and value predictability over ownership
- Either — if the cash gap is small, treat it as a lifestyle choice, not a math one
How a lease payment is actually calculated
A lease price is not a percentage of the car. It is two separate charges added together, and once you can see both, a dealer quote stops being a mystery number.
Depreciation charge = (capitalized cost − residual value) ÷ term in months. This is the part of the car you actually use up.
Rent charge = (capitalized cost + residual value) × money factor. This is the interest.
Capitalized cost is the negotiated price of the vehicle — it is negotiable exactly like a purchase price. Residual value is what the leasing company predicts the car will be worth at the end, set by them and not negotiable. Money factor is the interest rate in disguise: multiply it by 2,400 to get the approximate APR. A money factor of 0.00125 is about 3% APR.
Worked on the average new vehicle price of $49,855 over 36 months:
| Scenario | Residual | Money factor | Depreciation | Rent charge | Monthly payment |
|---|---|---|---|---|---|
| Market rate | 55% ($27,420) | 0.00250 (~6.0% APR) | $623 | $193 | $816 |
| Subsidised rate | 55% ($27,420) | 0.00125 (~3.0% APR) | $623 | $97 | $720 |
| Strong residual, subsidised | 62% ($30,910) | 0.00125 (~3.0% APR) | $526 | $101 | $627 |
That bottom row matters. Experian puts the average new-vehicle lease payment at $619 a month in Q1 2026 — and the only way to land near that figure on an average-priced car is a strong residual combined with a subsidised money factor. That is what a manufacturer lease promotion actually is: the residual is propped up and the money factor is bought down.
Two practical consequences. First, negotiate the capitalized cost, because it is the only one of the three inputs you control, and every $1,000 off the price removes about $28 a month on a 36-month lease. Second, ask for the money factor as a number. Dealers are not required to state it as an APR, and 0.00250 sounds harmless until you multiply it by 2,400 and see 6%.
Lease vs finance, lease vs purchase — the same question
These are three names for one decision, and a fourth question sits alongside them: whether to buy or keep the car you already have. Any vehicle lease calculation comes down to the same arithmetic — do you pay for the whole car, or rent the portion of it you use?
These are three names for one decision: do you pay for the whole car, or rent the portion of it you use? “Lease vs finance” usually means comparing a lease against a loan on the same vehicle, which is exactly what the calculator above does. “Lease vs purchase” sometimes means comparing against a cash purchase, in which case set the loan rate to 0% and the down payment to the full price.
A lease-to-own deal (often written simply as lease to own) or lease-purchase arrangement is a different product and worth treating with caution. It is structured as a lease but obliges or strongly incentivises you to buy at the end, and the effective interest rate is frequently far higher than a straightforward car loan. If you intend to own the car, compare a plain loan first — the Auto Loan Calculator will show you the honest total.
Frequently asked questions
Why is leasing's monthly payment lower? A lease only finances the depreciation during the lease, not the whole car. You pay for the part of the car you use and return the rest, so the payment is smaller — but you own nothing at the end.
What makes buying cheaper overall? The resale value you keep. If the car holds value well, the equity at the end offsets the higher payments and buying usually wins on total cost.
Does this include mileage and wear penalties? No. Those add to the real cost of leasing for high-mileage or hard-driving users and should be weighed on top of the cash comparison.
Is leasing ever the smarter money choice? It can be when a car depreciates quickly, when the buy rate or down payment is high, or when the cash gap is small enough that flexibility is worth more than ownership.
What term should I compare over? The calculator compares over the lease term so both options cover the same time. Buying keeps generating value after that period, which further favors ownership the longer you keep the car.
Should I keep my current car or lease a new one? Keeping a paid-off car is almost always cheaper, because your cost is repairs and it has no payment attached. The comparison worth running is your realistic annual repair bill against 12 lease payments. At the 2026 average lease payment of $619 a month, leasing costs about $7,428 a year before insurance, so a paid-off car has to be very unreliable before replacing it saves money.
What is a lease price and how do I negotiate it? The negotiable part of a lease price is the capitalized cost, which is the vehicle price the lease is built on. Residual value and money factor are set by the leasing company. On a 36-month lease, every $1,000 you take off the capitalized cost removes about $28 to $30 from the monthly payment, so negotiating the price matters just as much on a lease as it does on a purchase.
How do I convert a money factor to an interest rate? Multiply the money factor by 2,400. A money factor of 0.00125 is about 3% APR, and 0.00250 is about 6%. Dealers often quote the money factor rather than the rate because the decimal looks small, so converting it is the quickest way to see what the lease is really charging you.
Methodology
Lease cost is the amount due at signing plus all monthly payments. For buying, the loan payment is computed from price minus down payment at the given rate and term; the loan is amortized over the lease term to find payments made and the balance still owed at that point. Net buy cost is down payment plus payments made plus remaining balance minus the car's resale value. The lower net figure wins. Maintenance, insurance, taxes, and lease mileage/wear penalties are excluded. Estimates only, not financial advice.
Written by the CalcCottage team. We show the real number, not the marketing number.