FINANCIAL · LEASE VS. FINANCE

Lease vs. Finance Calculator

Compare the true cost of leasing vs. buying a car over the same period. Correctly nets the financed vehicle's resale value — the most common mistake in online calculators.

Lease Terms

Down payment equivalent

Charged at lease end

≈ 3.60% APR

% of MSRP at lease end

Sales Tax Treatment
Finance Terms

Market value decline/yr

Leasing is cheaper$1,282.99saved over 36 months
Lease
$567.37/mo
Due at signing$2,567.37
Total (36 mo)$22,820.32
Effective APR3.60%
Buy / Finance
$680.90/mo
Down payment$3,000.00
Net cost (36 mo)$24,103.31
Resale value$21,494.37

Cumulative cost over 36 months

$0$12,654$25,308mo 1mo 18mo 36
Lease Finance
Cumulative lease vs. finance cost by month
MonthLeaseFinance
1$2,567$6,259
7$5,972$10,029
13$9,376$13,488
19$12,780$16,652
25$16,184$19,531
31$19,588$22,135
36$22,820$24,103

Cost breakdown

Lease

Monthly payment$567.37/mo
Due at signing$2,567.37
Disposition fee$395
Total out-of-pocket$22,820.32

Finance

Monthly payment$680.90/mo
Down at signing$3,000.00
Resale (subtracted)−$21,494.37
Net cost$24,103.31

Assumptions: Nominal dollars (not NPV). Finance resale uses 15%/yr compound market depreciation, not the lease residual. Both legs compared over the 36-month lease horizon. Outstanding loan balance at horizon: $15,285 (subtracted as retained equity).

About This Calculator

Should you lease or buy your next vehicle? This calculator compares the true cost of each option over the lease term — including the financed vehicle's projected resale value, which most calculators forget to subtract. Enter your lease and loan terms to get a side-by-side verdict.

How It Works

Lease cost: depreciation fee + finance charge + taxes + disposition fee, compared over the lease term. Finance cost: down payment + loan payments over the same term, MINUS the projected market value of the car at that point (your retained equity). Using the money factor × 2400 to show the equivalent APR. Both legs are compared in nominal dollars over the exact same period — the lease term — so the comparison is apples-to-apples.

The Formula

Lease: depFee = (adjCapCost − residual) / months; finFee = (adjCapCost + residual) × MF; monthly = (depFee + finFee) × (1 + taxRate). Lease APR = MF × 2400. Finance: standard amortization, minus projected resale value at lease end (= MSRP × (1 − depRate)^years) minus any outstanding loan balance. Net finance cost = down + tax + payments − equity retained.

Frequently Asked Questions

Why does this calculator subtract the car's resale value from the finance cost?
A financed vehicle is an asset — at the end of your comparison period, you own a car worth thousands of dollars. Most simple calculators ignore this and make financing look more expensive than it really is. This calculator subtracts the projected market value (minus any remaining loan balance) to show the true net cost.
What is a money factor and how does it relate to APR?
Money factor is a lease-specific interest rate expressed as a tiny decimal (e.g. 0.00125). Multiply by 2,400 to get the equivalent APR (0.00125 × 2,400 = 3.0%). Multiplying by 24 instead — a common error — gives 0.03%, which is off by 100×.
What is the sales tax treatment toggle?
Most US states tax each monthly lease payment. Texas and Florida-style states tax the full capitalized cost upfront at lease signing. The toggle switches between these two treatments, which can significantly change the total cost in high-tax states.
Which is better — leasing or buying?
It depends on your situation. Leasing typically means lower monthly payments, newer vehicles more often, and no resale hassle — but you build no equity and pay more if you exceed mileage limits. Financing costs more monthly but you own an asset at the end. This calculator helps quantify the difference for your specific terms.