Lease vs Buy Car Calculator
Compare the true cost of leasing versus buying a car. See total costs, monthly payments, equity, and your break-even point.
Vehicle Information
Purchase Terms
Lease Terms
Your Situation
After 5.0 years and ~60,000 total miles, we estimate this vehicle could sell for around $15,530. Adjust based on the specific make/model.
How This Calculator Works
This calculator compares the total cost of leasing (down payment + monthly payments + tax + mileage penalties) against the net cost of buying (down payment + loan payments + tax, minus the equity you build).
Residual Value
The estimated value of the car at lease end. Higher residual = lower lease payment. Set by the manufacturer, not negotiable.
Money Factor → APR
Money factor × 2,400 = approximate APR. A money factor of 0.00125 ≈ 3% APR. Lower is better.
Holding Period Matters
The longer you keep a car, the more buying wins. After the loan is paid off, your only costs are maintenance — while the car still has value.
Related Calculators & Guides
- Car Affordability Calculator — Find out how much car you can afford based on your income
- 20/4/10 Rule Calculator — Apply the 20% down, 4-year loan, 10% income rule
- What Is the 20/4/10 Rule? — Complete guide to the car buying rule of thumb
Frequently Asked Questions
Is it better to lease or buy a car?
It depends on how long you plan to keep the car. Leasing is cheaper in the short term (2–3 years) because you only pay for depreciation, but you build no equity. Buying costs more upfront but saves money long-term since you own the vehicle outright after the loan ends.
What is a money factor and how does it relate to APR?
A money factor is the lease equivalent of an interest rate. To convert a money factor to an approximate APR, multiply it by 2,400. For example, a money factor of 0.00125 equals roughly 3% APR. Lower money factors mean less interest cost on your lease.
What is residual value in a lease?
Residual value is the estimated worth of the vehicle at the end of the lease term, expressed as a percentage of MSRP. A higher residual value means lower monthly payments because you're financing less depreciation. Vehicles that hold their value well (like Toyota and Honda) typically have higher residuals.
How long should I keep a car for buying to be cheaper than leasing?
Typically, buying becomes cheaper than leasing once you hold the car past the loan payoff point — usually 4–6 years. After the loan is paid off, your only costs are maintenance and insurance while the car still has value. Our calculator shows your exact break-even point.
What are excess mileage charges on a lease?
Most leases include a standard mileage allowance (typically 10,000–15,000 miles/year). If you exceed it, you'll pay a per-mile penalty at lease end, usually $0.15–$0.30 per mile. If you drive a lot, buying may be the better financial choice.
Does this calculator account for maintenance and insurance?
This calculator focuses on the core financial comparison: payments, down payments, taxes, equity, and mileage penalties. Maintenance and insurance costs are similar for leased and purchased vehicles of the same model, so they don't significantly change the lease-vs-buy decision.