Lease vs Buy Calculator – Compare Cost Estimator

What Is a Lease vs Buy Calculator?

A lease vs buy calculator compares monthly payment and total cost of leasing a vehicle versus buying the same vehicle with a loan over the same number of months. It shows buy loan payment, lease payment, total lease cost over lease term, and buy cost if you sell the buy car at residual value after lease term.

Buy Side: Vehicle price, sales tax rate assumption full price taxed, down payment for buy, loan APR and loan term. Tax amount = price × tax rate. Loan financed = price + tax - down buy. Buy payment uses standard amortization PMT = loan × r(1+r)^n/((1+r)^n-1). Remaining loan balance after lease term months is calculated for comparison if you sell car at residual.

Lease Side: Lease term, residual percent, lease APR converted to money factor, down payment for lease, and lease fees. Capitalized cost = price - down lease. Residual $ = price × residual %. Depreciation total = cap cost - residual. Monthly depreciation = depreciation / lease term. Money factor = lease APR / 2400. Monthly finance = (cap cost + residual) × money factor. Base lease = depreciation + finance. Lease payment = base × (1+ tax rate) when tax on monthly payment assumption.

Comparison Logic: Total lease cost = down lease + lease payment × lease term + fees. Buy cost if sold at residual = down buy + buy payment × lease term + remaining loan balance after lease term - residual $. Difference = buy cost - lease cost. Positive difference means lease cheaper over that period, negative means buy cheaper if sold at residual.

How To Use This Lease vs Buy Calculator

Step 1 - Enter vehicle and buy details: Enter vehicle price - example $30,000 - and sales tax - example 6% - Assumption: tax base = full price × rate, varies by state, some tax on payment for lease, some on full price, actual varies. Enter down buy $3,000 and down lease $2,000. Enter loan APR buy 7% and loan term 60 months. Valid loan term 36,48,60,72,84 default 60.

Step 2 - Enter lease details: Enter lease term 36 months - example - valid 24,36,48 default 36. Enter residual 55% - example - residual $ = $30,000×55%=$16,500. Enter lease APR 5% - example - money factor 0.002083. Enter lease fees $0 - example - acquisition or disposition. Assumption: fees vary by lender, actual varies.

Step 3 - Review comparison: Press Compare Lease vs Buy. Review buy payment vs lease payment, total lease cost, buy cost if sold at residual, remaining loan after lease term, and difference. Test: Price $30k tax 6% $1,800 loan buy $28,800 payment $554.10 at 7% 60mo. Cap $28k residual $16,500 depreciation $11,500 dep/mo $319.44 finance (28k+16.5k)×0.002083=$92.71 base $412.15 tax 6% payment $436.88 lease total $2k + $436.88×36=$17,727.68. Remaining loan after 36mo: loan $28,800 r0.005833 pow 1.233 bal $28,800×1.233 - $554.10×(0.233)/0.005833 = $35,510 - $22,132 = $13,378 remaining. Buy cost if sold at $16,500 residual = $3k + $554.10×36 + $13,378 - $16,500 = $19,826. Cost difference buy $19,826 vs lease $17,727 = buy costs $2,099 more over 36mo if sold at residual, lease cheaper monthly but no equity.

How It Calculates — Formula & Methodology

Source: CFPB auto loan amortization formula for buy, and standard lease formula used by leasing guides: depreciation + finance charge + tax.

Tax=Price×TaxRate | LoanBuy=Price+Tax-DownBuy | PMTbuy=LoanBuy×r(1+r)^n/((1+r)^n-1) | Cap=Price-DownLease | Residual$=Price×Res% | Dep=Cap-Residual | MF=LeaseAPR/2400 | Fin=(Cap+Residual)×MF | Base=Dep/LeaseTerm+Fin | LeasePay=Base×(1+TaxRate)

Steps with example $30k price, tax 6%, down buy $3k, down lease $2k, buy APR 7% 60mo, lease 36mo residual 55% lease APR 5% fees $0:

1. Tax = $30,000×6%=$1,800, LoanBuy=$30,000+$1,800-$3,000=$28,800, rBuy=7%/100/12=0.005833, nBuy=60 pow=1.4176 PMTbuy=$28,800×0.005833×1.4176/0.4176=$554.10
2. Cap=$30,000-$2,000=$28,000, Residual=$30,000×55%=$16,500, Dep=$11,500, Dep/mo=$319.44, MF=5%/2400=0.002083, Fin=($28,000+$16,500)×0.002083=$92.71, Base=$412.15, LeasePay=$412.15×1.06=$436.88
3. TotalLease=$2,000+$436.88×36+$0=$17,727.68
4. Remaining loan after 36mo: r=0.005833 pow36=1.233, Balance=$28,800×1.233 - $554.10×(1.233-1)/0.005833=$35,510-$22,132=$13,378
5. TotalBuyIfSold=$3,000+$554.10×36+$13,378-$16,500=$19,826, Diff= $19,826-$17,727=$2,099 lease cheaper over 36mo if buy car sold at residual.

Edge: r=0 handling PMT=Loan/n, MF=0 when lease APR 0, pow non-finite fallback to 1+r×n, residual % capped 0-90%, tax 0-15% capped, loan and cap floored at 0, payment non-finite fallback to principal/months.

What Results Mean

Buy Payment: Monthly loan payment for purchase including tax financed. Example $554.10 for $28,800 loan at 7% 60mo. Includes principal and interest only.

Lease Payment: Monthly lease payment including tax on payment assumption. Example $436.88 vs buy $554.10 lower monthly by $117.22.

Total Lease Cost: Cash outflow for lease over lease term = down lease + lease payment × lease term + fees. Example $17,727.68 over 36mo.

Buy Cost If Sold at Residual: Cash outflow for buy over same lease term if you sell car at residual value after lease term months. Includes down buy + buy payments during lease term + remaining loan balance - residual sale. Example $19,826. This shows net cost if you exit buy after lease term period at residual price.

Remaining Loan Balance: Loan balance still owed after lease term months if loan term longer than lease term. Example $13,378 after 36mo of 60mo loan. If you keep car, you continue payments, if you sell you must pay this balance.

Difference: Buy cost minus lease cost. Positive means buy costs more than lease over that period when sold at residual. Negative means buy costs less. Example $2,099 positive lease cheaper over 36mo but buy builds equity if you keep longer.

Example — Worked Comparisons

Base: Price $30k tax 6% down buy $3k down lease $2k buy APR 7% 60mo lease 36mo residual 55% lease APR 5% fees $0.

Outputs: Buy $554.10/mo, Lease $436.88/mo, Total Lease $17,727, Total Buy if sold $19,826, Diff $2,099 lease cheaper, Remaining loan $13,378.

Comparison A - Higher residual 65%: Residual $19,500 depreciation $8,500 dep/mo $236.11 finance (28k+19.5k)×0.002083=$98.96 base $335.07 lease payment $355.17 total lease $14,786, buy cost same $19,826 if residual used for sale? Actually residual higher $19,500 sale reduces buy cost to $16,878, now buy cheaper than lease $14,786? Buy $16,878 vs lease $14,786 diff $2,092 lease still cheaper but gap smaller. Shows residual strongly moves lease payment.

Comparison B - Lower lease APR 2%: MF 0.000833 finance $37.08 base $356.52 payment $377.91 total lease $15,604 vs buy $19,826 diff $4,222 lease cheaper more. Shows lease rate impact.

Comparison C - Longer loan term 72mo buy APR 7%: Loan $28,800 payment $489.56 lower monthly closer to lease $436, total lease $17,727 vs buy cost if sold after 36mo: remaining after 36mo of 72mo loan higher $16,200 approx buy cost $3k+$489.56×36+$16,200-$16,500=$19,323 vs lease $17,727 diff $1,596 lease cheaper but buy monthly now closer.

Common Mistakes

1. Comparing only monthly payment: Lease $436 vs buy $554 looks lease cheaper, but buy builds equity and after loan ends no payment. Total buy over full loan $33,246+down vs lease over same 60mo if extended 2 leases $29k+ but no car. Must compare total cost over same period and what you own after.
2. Ignoring remaining loan balance: Buy cost over lease term not just down + payments × lease term, must include remaining loan balance minus sale price if you sell. Forgetting remaining balance understates buy cost if sold early.
3. Using wrong money factor conversion: Money factor = APR/2400, not APR/100/12. Using monthly rate 0.005833 as money factor overstates finance charge ~2.8×. Correct 5% APR MF 0.002083 not 0.00416.
4. Forgetting tax assumption difference: Some states tax full price on buy but only payment on lease, some tax cap cost on lease. This calculator assumes tax on full price for buy and tax on payment for lease as common assumption, actual varies by state.
5. Not handling r=0 for 0% APR: At 0% buy APR, payment = loan/term, remaining balance = loan - payment×months. At 0% lease APR, finance zero, lease = depreciation/term × (1+tax). This calculator includes r=0 and MF=0 fallbacks.

Practical Tip

Compare with same price for both options and same lease term as comparison horizon. Test residual 50% vs 60% to see lease sensitivity - each 5% residual increase on $30k lowers depreciation $1,500 and lease payment about $44/mo over 36mo. Test down payment: $1,000 extra down lease lowers lease payment by $1,000/lease term plus finance reduction small. Keep total transport cost including insurance - lease often requires higher coverage - in budget. If you drive high miles, factor excess mileage charge not included here.

Important Limitations

This calculator provides estimates for educational purposes only. Not financial, lending, or investment advice. Results depend on inputs you provide and assumptions described. Tax assumption: buy tax = price × tax rate, lease tax = base lease × tax rate, actual state rules vary, some tax cap cost, some tax payment, some tax full price on lease, some exempt. Residual assumption: residual % of MSRP set by lender, actual market value at lease end may differ. Money factor assumption: MF = lease APR/2400, actual lease may quote MF directly, actual varies. Fees assumption: acquisition, disposition, documentation vary by lender and dealer. Approval, APR, residual, money factor depend on credit, vehicle, mileage allowance and market. Verify with lender lease agreement, Truth in Lending and state agency. Inputs processed in your browser and not sent to a server for this calculator component.

Frequently Asked Questions

How is lease payment calculated?

Cap cost = price - down lease. Residual $ = price × residual %. Depreciation = cap - residual. Monthly depreciation = depreciation / lease term. Money factor = lease APR /2400. Monthly finance = (cap + residual) × money factor. Base lease = depreciation per month + finance per month. Lease payment = base × (1+ tax rate) for tax on payment assumption. Total lease = down lease + lease payment × lease term + fees. Example $30k price down $2k cap $28k residual 55% $16,500 depreciation $11,500 dep/mo $319.44 finance $92.71 base $412.15 payment $436.88 at 6% tax.

How is buy payment calculated?

Tax = price × tax rate assumption full price taxed. Loan = price + tax - down buy. Monthly rate r = APR/100/12, n = loan term months. If r zero, payment = loan / n else payment = loan × r(1+r)^n/((1+r)^n-1). Remaining balance after k months = loan×(1+r)^k - payment×((1+r)^k-1)/r. Example $30k price tax $1,800 loan $28,800 at 7% 60mo payment $554.10.

How to compare over same period?

Pick lease term as comparison horizon - example 36 months. Total lease cost = down lease + lease payment × 36 + fees. Buy cost if sold at residual after 36 months = down buy + buy payment ×36 + remaining loan balance after 36 months - residual $. Difference = buy cost - lease cost. Positive means lease cheaper over that horizon if you sell buy car at residual, negative means buy cheaper. This shows cash outflow difference, not long term equity if you keep buy car after loan paid.

What is residual value?

Residual is estimated value of vehicle at end of lease term set by lender as percent of MSRP. Example 55% on $30,000 = $16,500. Higher residual means less depreciation, lower lease payment. Actual market value at end may differ from residual, leading to equity or owed amount depending on lease contract.

What is money factor?

Money factor is lease finance rate. Money factor = lease APR /2400. Example 5% APR = 0.002083 money factor. Monthly finance charge = (cap cost + residual) × money factor. Lower money factor means lower finance charge and lower lease payment. Some leases quote money factor directly, multiply by 2400 to get approximate APR.

Does this include insurance or maintenance?

No. Comparison includes price, down payments, tax, APR, term, residual, money factor, fees only. Insurance, fuel, maintenance, excess mileage, wear charges vary by vehicle, driver, miles and are not included. Lease often requires higher liability and gap coverage, check lease agreement.

Does this calculator save my data?

No. Calculation runs in your browser. Inputs are not sent to a server. When you close or reload, inputs reset. No data storage for this calculator component. Browser-side only. All terms validated, no Infinity or NaN displayed.