Car Lease vs Buy Calculator - Which Is Better?
Compare the true cost of leasing vs buying a car. Calculate monthly payments, total cost of ownership, and find out which option saves you more money.
Vehicle Information
Lease Terms
≈ 3.0% APR
Buy/Finance Terms
Comparison
Recommendation
🚗 Buy
Save $11,155 over 6 years
Lease Payment
$452/mo
Buy Payment
$626/mo
Lease vs Buy: Complete Comparison
✅ Lease Pros
- • Lower monthly payments (typically 30-40% less)
- • Always drive a new car with latest features
- • Warranty covers most repairs
- • No resale hassle at end of term
- • Lower down payment required
- • Tax benefits for business use
❌ Lease Cons
- • No ownership/equity at end
- • Mileage limits (typically 10-15k/year)
- • Excess wear charges
- • Early termination fees
- • Higher insurance requirements
✅ Buy Pros
- • Build equity/ownership
- • No mileage restrictions
- • Customize as you wish
- • Cheaper long-term (5+ years)
- • Can sell anytime
- • No wear-and-tear penalties
❌ Buy Cons
- • Higher monthly payments
- • Depreciation risk (20-30% year 1)
- • Repair costs after warranty
- • Larger down payment needed
- • Resale hassle when selling
Understanding Lease Terms
Money Factor
The lease equivalent of interest rate. Multiply by 2,400 to get APR.
Example:
0.00125 × 2,400 = 3.0% APR
0.00200 × 2,400 = 4.8% APR
Good: Under 0.0015 | Bad: Over 0.0025
Residual Value
Predicted value at lease end. Higher residual = lower payment.
Typical Residuals:
36 months: 50-60%
24 months: 60-70%
Toyota/Honda: Higher | Luxury: Lower
Cap Cost Reduction
Down payment + trade-in. Reduces monthly payment but doesn't build equity.
Tip:
Put minimal down on leases. If car is totaled, you lose that money.
Recommended: $0-2,000 down
When Should You Lease vs Buy?
📋 Lease If You...
- ✓Drive under 12,000-15,000 miles/year
- ✓Want a new car every 2-3 years
- ✓Prefer lower monthly payments
- ✓Use car for business (tax deduction)
- ✓Don't want to deal with selling
🚗 Buy If You...
- ✓Drive over 15,000 miles/year
- ✓Plan to keep car 5+ years
- ✓Want to build equity
- ✓Like to customize your vehicle
- ✓Have kids/pets (wear and tear)
Frequently Asked Questions
Is it cheaper to lease or buy a car?
Short-term (2-3 years): Leasing is cheaper with lower monthly payments. Long-term (5+ years): Buying is cheaper because you own the car outright after paying off the loan. The break-even point is typically around 4-5 years of ownership.
What is a good money factor for a lease?
A good money factor is 0.0015 or lower (equivalent to 3.6% APR). Excellent credit scores (720+) can get money factors as low as 0.0010 (2.4% APR). Anything above 0.0025 (6% APR) is considered high. Always negotiate the money factor like you would an interest rate.
What happens if I go over mileage on a lease?
You'll pay excess mileage fees, typically $0.15-$0.30 per mile over the limit. For example, if you're 5,000 miles over at $0.25/mile, you'd owe $1,250 at lease end. If you know you'll exceed mileage, negotiate higher miles upfront (cheaper) or consider buying instead.
Should I put money down on a lease?
Generally, no. Unlike buying, a down payment on a lease doesn't build equity. If the car is totaled or stolen, you lose that money (gap insurance covers the lease, not your down payment). Instead, negotiate a lower money factor or look for manufacturer lease specials.