Lease vs Buy Car Calculator
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Car lease vs buy calculator: a lease built from money factor and residual against a loan over the same period, with mileage charges and the equity you keep.
Educational estimate only. Not a lending decision. Your numbers stay in this browser.
Results
How to read this: the verdict describes how much room your numbers leave, not a decision or an offer. Change any input to see how much the result moves.
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A guided loan comparison journey is not built yet. Until it is, the loan calculator group puts payment, term, and total cost next to each other.
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These guides explain repayment schedules, APR, personal loan payment factors, and auto loan total cost.
- Loan repayment schedule explained
- APR vs interest rate
- Personal loan payment factors
- Auto loan total cost
For all guide topics, open Guides. For source and estimate boundaries, read Calculation Methodology and Sources and Assumptions.
Assumptions and formula
The lease payment is derived rather than typed in: a depreciation charge (the adjusted capitalized cost less the residual value, spread over the term) plus a finance charge (the adjusted capitalized cost plus the residual, times the money factor), with sales tax on the payment. Buying is measured over the same months: the down payment plus the loan payments made, less the equity you hold at the end, which is the car’s resale value less the loan balance still owed.
A money factor times 2,400 gives the equivalent APR. On the buying side, sales tax is added to the price and financed. The lease total includes the acquisition and disposition fees and, when you enter your mileage, the excess-mileage charge. If you enter a return you could earn elsewhere, each option is also charged for the cash it ties up at signing. A difference under $250 is reported as level.
Worked example
A $35,000 car over 36 months with a 58% residual, a 0.0025 money factor (6% APR) and $2,000 down on the lease gives a payment of $486.03: $352.78 of depreciation plus $133.25 of finance charge. With a $695 acquisition fee and a $395 disposition fee, the lease costs $20,587. Buying with $5,000 down on a 6.5%, 60-month loan costs $586.98 a month, but after 36 months the car is worth $20,300 against $13,176.97 still owed, so $7,123 of equity comes off and buying costs $19,008: $1,579 less.
Money factor to APR conversion
Leases quote their finance charge as a money factor rather than an interest rate. Multiplying the money factor by 2,400 gives the approximate equivalent APR, which makes a lease quote comparable with a car loan.
| Money factor | Equivalent APR |
|---|---|
| 0.0010 | 2.4% |
| 0.0015 | 3.6% |
| 0.0020 | 4.8% |
| 0.0025 | 6.0% |
| 0.0030 | 7.2% |
| 0.0035 | 8.4% |
Dealers can mark up the money factor above the rate the leasing company approved you for, and it is negotiable in the same way as a loan rate. Ask for it in writing and convert it. If the APR it implies is well above what a bank would charge for a loan, the lease is more expensive than it looks.
The monthly lease payment is depreciation plus a finance charge: the drop from the negotiated price to the residual value, spread over the term, plus the money factor times the sum of the price and the residual. That is the formula the calculator uses, so you can check a dealer's payment instead of taking it on trust.
Frequently asked questions
Is it cheaper to lease or buy a car?
A lease usually costs less per month because you only pay for the depreciation during the term, not for the whole car. Whether it costs less overall depends on what you are left holding. This page builds the lease payment from the price, residual value, money factor, and term rather than asking you to type in a quoted figure, so a dealer number can be checked against it. It then charges the purchase for its payments and credits back the vehicle value at the end less anything still owed, because a lessee hands the car back and a buyer does not. Excess mileage is included when you supply your mileage and the allowance, which is the most common way a lease that looked cheaper turns out not to be. Use the page as a car lease calculator on its own if you only have the lease quote: the payment from money factor and residual is shown before the comparison. A car lease or buy calculator is only fair if both sides use the same term and mileage, so this lease or buy calculator holds those fixed; the car lease calculator money factor input is the interest rate in the form dealers quote it, converted here to an APR. If you want a car lease estimator, the lease side gives the monthly lease payment for an auto lease alongside the cost of buying the same vehicle.
Why is the lease payment calculated rather than entered?
So the comparison can check a dealer quote instead of trusting it. The payment is built from the price, residual value, money factor, and term, the way a lease contract builds it. Buying is credited with the vehicle value at the end less anything still owed, because a lessee hands the car back and a buyer does not.