Lease vs buy calculator
The honest comparison credits buying with the car you still own at the end. Without that, every lease looks cheap.
Buying costs less over the term, by
$1,271
$533.83 a month leasing versus $1,140.76 financing
- Lease payment
- $533.83
- per month
- Finance payment
- $1,140.76
- per month
- Lease total cost
- $22,218
- you own nothing at the end
- Buy net cost
- $20,947
- after $23,120 resale value
›How the lease payment breaks down
- Depreciation feevalue used up, spread over the term
- $383.33
- Rent chargeinterest on cap cost plus residual
- $150.50
- Base paymentbefore tax
- $533.83
- Tax0% on the payment, not the car
- $0.00
Buying is credited with the car’s resale value at term end, which is the only fair way to compare against a lease that leaves you owning nothing. Mileage limits, wear charges and gap insurance are not modelled and all favour buying.
Questions
›Is leasing cheaper than buying?
Monthly, almost always. Over the term, usually not. A lease only charges you for the value used up plus a rent charge, so the payment is lower, but at the end you own nothing. Buying costs more per month and leaves you an asset.
›What is a money factor?
The lease equivalent of an interest rate, quoted as a small decimal. Multiply it by 2400 to get the equivalent APR: a money factor of 0.00250 is 6% APR. Dealers quote it in this form precisely because it is hard to compare at a glance.
›What is residual value?
What the leasing company expects the car to be worth at the end of the term, set when the lease is written. A high residual means less value is used up during the lease, which lowers your payment.
›Why is lease tax lower?
In most places you are taxed on the monthly payment rather than the full purchase price, because you are only paying for part of the car’s life. This calculator applies tax the same way.
›What is not included here?
Mileage limits and excess-mileage charges, wear-and-tear penalties, gap insurance and disposition fees. All of them push the true cost of leasing up.