LeaseCalc

Lease vs Buy Calculator

Lease or buy? Compare total cost over the same period and see which saves more.

Vehicle price

Down payment

Lease payment/mo

Lease term (months)

Residual value %

Buy APR

Buy term (months)

Recommendation

Leasing is cheaper

Difference: $5,237

Total lease cost: $19,200
Total buy payments: $46,437
Buy equity at lease end: $22,000

What you entered

Price: $40,000Lease: $450/mo × 36Buy: 6.5% × 60 mo

1
Total lease cost
$3,000 down + $450 × 36 mo= $19,200
2
Buy: monthly payment
$37,000 loan at 6.5% for 60 mo= $724/mo
3
Total buy payments
$3,000 + $724 × 60= $46,437
4
Estimated vehicle value at lease end
$40,000 depreciated over 36 mo= $22,000
5
Effective buy cost (payments − equity)
$46,437 − $22,000= $24,437

Result

Recommendation: Leasing is cheaper

Over 36 months, leasing costs $19,200 with no equity. Buying costs $46,437 in payments but you retain ~$22,000 in vehicle value. Leasing is cheaper by $5,237.

How cheap a 36-month lease must be to beat buying the same car

Each row buys the car with 3,000 down on a 60-month loan at 6.5 percent APR, then values it at 36 months using a 55 percent residual. Payments made minus the value still owned gives the effective 3-year cost of buying, and the last column is the monthly lease payment (also with 3,000 down) that would exactly match it.

Vehicle price	Total buy payments (60 mo at 6.5%)	Value kept at 36 months	Effective 3-year buy cost	Break-even lease payment
$25,000	$28,827	$13,750	$15,077	$335/mo
$30,000	$34,697	$16,500	$18,197	$422/mo
$35,000	$40,567	$19,250	$21,317	$509/mo
$40,000	$46,437	$22,000	$24,437	$595/mo
$45,000	$52,307	$24,750	$27,557	$682/mo
$50,000	$58,177	$27,500	$30,677	$769/mo
$60,000	$69,916	$33,000	$36,916	$942/mo
$75,000	$87,526	$41,250	$46,276	$1,202/mo

Read the last column as a threshold: a quote below it beats buying over three years, a quote above it does not. The comparison is deliberately cut at 36 months, and that is where leasing looks strongest. Keep a bought car past the loan payoff and the payment-free years swing the answer hard toward buying, which is the single biggest reason buying usually wins on total cost. The same 3,000 down payment is applied to both sides, the loan still has 24 months to run at the 36-month mark so the equity shown is not free cash, and the residual is assumed to be the car's real market value. Not included: excess mileage charges of 15 to 30 cents a mile, wear-and-tear and disposition fees at lease end, insurance differences, or maintenance once a warranty expires. Illustrative only. Put your own quoted lease payment, APR and residual into the fields above.

How lease payments work

You pay for the depreciation during the lease term plus a finance charge. A $40,000 car with a 55% residual after 3 years has $18,000 of depreciation — roughly $500/month before the money factor. Lower residual = higher payment. The money factor × 2400 ≈ equivalent APR.

When leasing makes more sense

Lease if you want a new car every 2-3 years, drive under 12K miles/year, and want lower monthly payments. Buy if you keep cars 5+ years (the payment-free years after payoff are where buying wins), drive a lot, or want to modify the vehicle. Buying almost always wins on total cost if you hold the car long enough.

Frequently asked questions

A $40,000 car — lease at $450/month or buy with $500/month payments?

Enter both scenarios above with the same time period. A 36-month lease at $450/month costs $16,200 and you return the car. A 60-month loan at $500/month costs $30,000 total but you own a car worth roughly $16,000-$18,000. Buying wins if you keep the car past payoff.

What's a money factor and how does it relate to APR?

The money factor is the lease's financing charge expressed as a small decimal (like 0.00125). Multiply by 2,400 to get the approximate APR equivalent: 0.00125 x 2,400 = 3.0% APR. Lower money factor = cheaper financing.

Is it ever cheaper to lease than buy?

In total cost over time, buying almost always wins if you keep the car 5+ years. Leasing wins only if the monthly payment difference is invested wisely, or if you're in a state/role where lease payments are tax-deductible (some business use cases).

How does depreciation affect this comparison?

Lease payments are essentially paying for the car's depreciation during the lease term plus a finance charge. The car depreciation calculator shows how quickly your specific car loses value — faster depreciation means higher lease payments and a stronger case for leasing over owning a depreciating asset.

What happens if I exceed the mileage limit on a lease?

Most leases charge $0.15-0.30 per excess mile. Exceeding a 12,000-mile/year limit by 5,000 miles per year over 3 years adds $2,250-$4,500 in penalties at lease-end. If you drive a lot, buying is almost certainly cheaper.