Lease vs. Buy Calculator

How this is calculated

A lease payment is not a mystery and it is not negotiable magic. It is two numbers added together, and United States federal law requires the lessor to show you both. This tool builds it in the same order the disclosure box on your lease worksheet does.

adjusted cap cost = gross capitalized cost − cash and trade-in put down
depreciation      = adjusted cap cost − residual value
  ÷ term          = the depreciation part of the payment

rent charge       = (adjusted cap cost + residual value) × money factor

lease payment     = depreciation ÷ term + rent charge + other monthly charges
money factor × 2400 = the same cost of money, read as an APR

lease, all in     = cash down + fees + payment × term + disposition + excess miles

The buying side is the ordinary amortization formula — M = P × r ÷ (1 − (1 + r)⁻ⁿ), with r the APR divided by twelve — carried out over the same months the lease would have run:

paid out    = cash down + fees + monthly payment × months elapsed
still owed  = the loan balance at that month, interest first
equity      = what it sells for − still owed

buying, all in = paid out − equity

Why the comparison subtracts what you still own

This is the whole argument of the page. At the end of a three-year lease you hand back the keys and own nothing. At the same moment on a five-year loan you are still making payments and still owe a balance — but you are holding a car. Counting only what left your bank account makes leasing look far better than it is; counting the car you keep, net of the debt still on it, is the only comparison that means anything. So the buying figure here is everything paid out, minusthe equity you would walk away with if you sold that day. When the loan has outrun the car's value, that equity is negative, and the tool says so rather than quietly flooring it at zero.

The source: the disclosure the law already requires

The lease arithmetic here is not our invention. Under the Consumer Leasing Act's Regulation M, 12 CFR § 1013.4(f), a motor-vehicle lease must disclose “a mathematical progression of how the scheduled periodic payment is derived” — and the regulation then names each line: gross capitalized cost, capitalized cost reduction, adjusted capitalized cost, residual value, depreciation and amortized amounts, rent charge, total of base periodic payments, number of payments, base periodic payment, an itemization of other charges, and the total periodic payment. Every lease field on this page is one of those lines, using the regulation's own names, so you can fill the form straight off the paper.

The rent charge formula comes from the Federal Reserve Board's Keys to Vehicle Leasing, which states that to find the monthly rent charge “the money factor is multiplied by the sum of the adjusted capitalized cost and the residual value,” and works the example .00354 × ($31,150) = $110.27. That exact case is pinned as a test in this site's math checks: if our arithmetic ever stops reproducing the Fed's figure, the build fails.

On the money factor, and the 2400

The rent charge is an average-balance approximation rather than an amortization. The lessor's stake in the car falls steadily from the adjusted capitalized cost down to the residual value, so its average over the term is the midpoint of the two — and the money factor is defined as half the monthly interest rate to match, which is why multiplying the two figures rather than their average gives the right answer. Run that backwards and money factor × 2 × 12 × 100 = APR, the familiar multiply-by-2400. The Federal Reserve is explicit that the money factor “is not a lease rate and cannot be converted to a lease rate by moving the decimal point” — which is precisely why a figure like .00250 gets quoted at you instead of 6%. This page prints the conversion next to the loan APR you entered.

Mileage is a cost on one side only

Leases cap your annual mileage and charge for every mile past it, commonly 15 to 30 cents. Drive 18,000 miles a year on a 12,000-mile allowance and a three-year lease ends with an 18,000-mile overage — at 25 cents, $4,500 due at turn-in. A buyer has no such cap. The miles are not free on the buying side either, but they show up as a lower resale value rather than a bill, which is why they belong in the resale figure you enter rather than in a separate charge. Leave the excess-mileage field blank to take mileage out of the comparison entirely.

What this does not cover

Your state's tax treatment. Most states tax each lease payment; some tax the full capitalized cost at signing; a couple tax the whole price of the vehicle even on a lease. No single input could capture that, so tax is entered as a monthly charge on the lease and an up-front amount on the purchase — the same split the federal disclosure uses — and your worksheet has the real figures.

Also excluded: wear-and-tear charges at turn-in, which are real and unpredictable; gap insurance, usually bundled into a lease and bought separately with a loan; early termination, which is punishing on a lease and merely inconvenient on a loan; and the opportunity cost of your down payment — money handed over at signing is money not earning anything, and nothing here is discounted to say so. Insurance and maintenance are left out as broadly similar over the same term, with the caveat that a lease normally stays inside the factory warranty and lessors often require higher liability limits. Finally, every figure is held flat: the resale value you type is the one assumption doing the most work on this page, and it is the one nobody can verify in advance. Change it and re-read the answer before you sign anything.

Last reviewed: August 2026