Money & Finance
Lease vs Buy Car Calculator
Compare leasing and buying the same car by net cost, not monthly payment, with a money-factor converter and a residual flip-point table.
How it works
Behind the numbers
The monthly lease payment has two parts: depreciation (cap cost minus residual value, divided by the term) and a finance charge (cap cost plus residual value, times the money factor). Cap cost is the price minus what you pay at signing. Money factor converts to APR by multiplying by 2400, so 0.00208 is about 4.99%; the page includes a converter that works in both directions.
Net cost is the comparison unit: total paid minus what you keep. The lease side adds the amount due at signing, all payments, the disposition fee, and mileage overage beyond 12,000 miles per year. The buy side adds the down payment and all loan payments, then subtracts the equity left at the end of the term (market value from your depreciation rate minus the remaining loan balance). Comparing monthly payments instead misleads, because the buyer's payment builds equity and the lease payment does not.
Two tables answer the follow-up questions. The residual flip table recomputes the lease net cost at residuals from 40% to 65% and shows where the verdict crosses: high residuals favor leasing. The term comparison runs both sides at 24, 36, and 48 months. Insurance, maintenance, and taxes are left out of both sides for a like-for-like read. This is a planning estimate, not financial advice.
FAQ
Questions, answered
How do I convert money factor to APR?
Multiply the money factor by 2400. A factor of 0.00208 equals about 4.99% APR. Dealers quote the factor; the converter on this page works in both directions.
Is it cheaper to lease or buy a car?
It depends on the residual and how long you keep the car. In this calculator's default example ($40,000 car, 55% residual, 36 months), buying costs about $2,500 less in net terms; raise the residual to 65% and leasing wins. Run your own numbers and watch the flip table for the crossing point.
What is the residual flip point?
The residual percentage where the lease's net cost drops below the buyer's. A high residual means you pay for less depreciation, which is the lease's main lever. The table lists 40% through 65% so you can see where your deal lands.
Does mileage change the lease vs buy math?
Only on the lease side. Miles beyond the 12,000-per-year allowance are charged at your overage rate, often $0.25 per mile: driving 15,000 miles a year on a 36-month lease adds $2,250. Enter your real annual mileage to keep the comparison honest.
Why compare net cost instead of monthly payments?
A lease payment is usually lower than a loan payment, which flatters leasing. Net cost counts everything paid and subtracts the equity the buyer keeps at the end, so both options are measured in the same unit.