Compare leasing a car with financing the same car over the lease term
Estimates only, not financial advice. What you type stays on your device. Checked against sources on 29 Sept 2026.Leasing looks cheaper each month because you pay only for the value the car loses. Buying costs more each month but leaves you with a car worth something. To compare them fairly, this page counts what you pay over the lease term either way, then takes off the equity a buyer would hold at the end.
Rates and rules read from Federal Reserve, Keys to Vehicle Leasing on 29 Sept 2026; they may have changed since.
Enter the lease offer: MSRP, Negotiated price (cap cost), Residual, % of MSRP, Money factor and Term.
Under Buying instead, type the Loan APR and Loan term you were offered for the same car.
Keep the same Cash down and Trade-in equity so both options start from the same money.
Read the Lease vs buy tab, which opens first here, and compare the Net cost of each.
The car is valued at the lease’s residual.
A car lease payment is not a loan payment on the price of the car. You pay for the value the car loses while you have it, plus a finance charge, plus sales tax in most states. This calculator shows each part, so you can check a dealer's worksheet line by line.
Sales tax. Most states tax each monthly payment, which is the default here. A few collect tax at signing on the total of the payments; choose "Upfront" for that. Some states tax the full price of the car or the cash down payment as well, which this calculator does not model, so check your state's rule and enter your combined state and local rate.
Lease or buy. The comparison finances the same car at the loan APR you enter, with sales tax on the price and the same cash down. It counts what you would pay over the lease term either way, then subtracts the equity a buyer would own at the end, valuing the car at the lease's residual.
The rest of the article, and all 6 questions about Auto Lease Calculator, are on the Auto Lease Calculator page.
Take the adjusted cap cost, subtract the residual value and divide by the months: that is the depreciation fee. Add the adjusted cap cost and the residual and multiply by the money factor: that is the finance fee. Their sum is the base payment, and sales tax usually goes on top of it.
Multiply the money factor by 2,400. A money factor of 0.00125 is about 3.0% APR, and 0.0025 is about 6.0%. The conversion is a convention and approximate, but it is close enough to compare a lease offer with a loan rate. Dealers can mark the money factor up, so ask for the buy rate.
The residual is what the lender expects the car to be worth when the lease ends, set as a percentage of MSRP. A higher residual means less depreciation to pay, so a lower payment. Leasing companies publish residuals by model and term each month; the dealer's worksheet shows the one being used.
Over the lease term, leasing usually costs less cash, but buying leaves you with equity. This calculator subtracts that equity, valuing the car at the residual, to compare the two fairly. Over many years, keeping a bought car after the loan is paid off is normally the cheapest option.
Rates and rules change; check the source before you rely on a figure.
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