How this calculator works
- 1Enter the vehicle price and your planned down payment — both scenarios use the same car.
- 2Set your loan APR and term (36-84 months) for the buying side.
- 3Set the money factor, residual value, lease term, and due-at-signing amount for the leasing side.
- 4Pick an analysis period of 3-7 years. Back-to-back leases are assumed when the period outlasts one lease term.
- 5Read the result: net cost = everything paid, minus the equity you hold at the end. Lower net cost wins.
What each input means
- Vehicle price
- The negotiated selling price — used as the loan basis and the lease’s capitalized cost.
- Down payment
- Cash paid upfront on the purchase. Reduces the amount financed.
- APR
- Your loan’s annual interest rate. Use a real quote, not the advertised teaser.
- Money factor
- The lease’s interest rate in disguise. Multiply by 2,400 for the approximate APR.
- Residual value
- The bank’s prediction of the car’s value at lease end, as a percentage of price. Higher residual = lower payment.
- Due at signing
- Cash at lease signing, treated here as cap-cost reduction plus fees. Does not include the first monthly payment.
- Analysis period
- The horizon for the comparison. Short horizons favor lease cash flow; long horizons favor ownership.
- Net cost
- Total paid plus any remaining loan balance, minus the vehicle value you hold. Leases hold no value at the end.
Assumptions and formulas
Loan payment: standard amortization — principal × monthly rate ÷ (1 − (1 + monthly rate)−months).
Lease payment: depreciation charge ((net cap cost − residual) ÷ term) plus finance charge ((net cap cost + residual) × money factor).
Vehicle value: the buying side assumes 15% annual depreciation from the entered price.
Continuous leasing: when the analysis period outlasts a lease, a new identical lease begins — including a new due-at-signing amount.
Excluded: sales tax, insurance, fuel, maintenance, and mileage-overage charges. They apply on both paths but vary by state and driver.
A reference example
Take a $40,000 car with $5,000 down. Financing the remaining $35,000 at 7% APR for 60 months costs $693/month — $46,582 in total cash. At year six the car is still worth $18,000, so the net cost is $28,582.
Leasing instead — two back-to-back 36-month leases at $450/month with $2,000 due at each signing — costs $36,400 with no equity at the end. Buying comes out $7,818 ahead over six years, while the single 3-year lease is easier on cash flow early on.
Full walkthrough, assumptions, and when each side wins: see our guide to leasing vs. buying a car.
Calculator FAQs
What money factor should I enter?▼
Use the money factor from your actual quote — ask the dealer directly; they must disclose it. Multiply it by 2,400 to see the equivalent APR (0.00250 ≈ 6.0%). If you are just exploring, 0.002-0.003 is a typical range for good credit; advertised promotional leases can run much lower.
What residual value percentage should I use?▼
Use the residual from your quote — it is set by the leasing bank per model and term, not negotiated. For rough exploration, mainstream vehicles on 36-month leases commonly land around 50-60% of MSRP. A higher residual means less depreciation to pay for and a lower payment.
What does "due at signing" include in this calculator?▼
The cash you bring to lease signing — cap-cost reduction plus upfront fees. The calculator treats it as a capitalized-cost reduction and does not double-count your first monthly payment inside it. Dealer quotes sometimes fold the first payment into their due-at-signing figure, so subtract it before entering.
Why does the analysis period change which option wins?▼
Because the two costs are shaped differently over time. Early on, leasing is easier on cash while a loan is still mid-amortization; after payoff, the owned car keeps its value while lease payments and signing fees keep repeating. In our reference example, one 3-year lease beats the loan on cash flow, but buying is $7,818 ahead by year six.
Does the calculator include taxes, insurance, and maintenance?▼
No. Sales tax, insurance, fuel, and maintenance are excluded because they apply on both paths, though not always equally — lease taxation in particular varies by state. Treat the results as a structural comparison of financing costs, then confirm the out-the-door numbers on your actual quotes.
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