Compare the true cost of leasing versus purchasing. See total costs, monthly cash flow, and make the right decision.
⚠️ Financial Disclaimer: This calculator provides estimates for educational purposes only and does not constitute financial advice. Actual costs vary by dealer, credit score, location, and market conditions. Consult a financial advisor before making vehicle financing decisions.
Enter vehicle details: Input the MSRP and your negotiated price. A lower negotiated price benefits both lease and purchase options.
Set lease parameters: Enter the lease term, down payment, residual value percentage, and money factor. Contact your dealer for these figures.
Configure purchase terms: Enter the loan term, interest rate, and how many years you plan to keep the car after purchase.
Click Calculate: The tool compares total costs over the same ownership period, including depreciation and residual equity.
Review the charts: The bar chart shows total cost comparison. The cash flow chart shows monthly spending patterns over time.
It depends on your situation. Leasing typically has lower monthly payments but no equity at the end. Buying costs more per month but you own the asset. If you keep a car 5+ years, buying is almost always cheaper. If you switch cars every 2-3 years and want lower payments, leasing may make sense.
The residual value is the estimated worth of the car at the end of the lease term, set by the leasing company. A higher residual value means lower lease payments because you're paying for less depreciation. Typical residual values range from 50-65% for a 36-month lease.
Monthly lease payment = (Depreciation + Rent Charge) / Lease Term. Depreciation = Negotiated Price - (MSRP × Residual %). Rent Charge = (Negotiated Price + MSRP × Residual %) × Money Factor. The money factor converts to APR by multiplying by 2400.
The money factor is the interest rate expressed differently for leases. To convert to APR: multiply by 2400. For example, 0.00125 × 2400 = 3.0% APR. Always convert and compare with auto loan rates to ensure you're getting a fair deal.
Buying at lease end makes sense if the car's market value exceeds the residual (buyout) price. Check used car listings for your specific make/model/year/mileage. If market value is $2,000+ above the buyout, it's usually worth purchasing.
Common overlooked costs: acquisition fee ($300-$1,000), disposition fee ($200-$500), excess mileage charges ($0.15-$0.30/mile), wear-and-tear charges, gap insurance, and higher insurance premiums. These can add $1,500-$3,000+ over the lease term.
A new car loses 20-30% of value in year one and 50-60% over 5 years. With leasing, you only pay for depreciation during the lease term. With buying, you bear the full depreciation but own the remaining value. Slow-depreciating cars favor buying.
Yes. Negotiate the capitalized cost (selling price) just like when buying. Also negotiate the money factor, acquisition fee, and mileage allowance. Don't mention leasing until after you've agreed on a price. Manufacturer specials can lower costs significantly.