How it works
Both options are compared over the same period, which should match the quoted lease term. Buying assumes the vehicle is sold at the end, so the remaining equity is recovered. If the loan balance exceeds resale value, equity is negative and increases the modeled buying cost. A paid-off car still has a residual asset value.
The lease inputs start from an actual quoted monthly payment rather than attempting to derive an offer from a money factor. Include monthly tax in that payment. Extra upfront cash excludes the first monthly installment because all installments are already counted; otherwise the first payment would be counted twice. Exclude refundable deposits.
The formula behind the estimate
Every result starts with a defined model and visible assumptions.
Buy equity at end = resale value − remaining loan balance Buy net cost = down payment + loan payments made − end equity Lease total = extra upfront cash + monthly payment × comparison months + other lease fees + total excess miles × per-mile charge
A worked example
Buy a $20,000 vehicle with $2,000 down and a zero-rate, 60-month loan. After 36 months, you have made $10,800 in payments and owe $7,200. If resale is $12,000, equity is $4,800 and net buying cost is $8,000. A lease at $250 for 36 months plus $1,000 upfront, $300 fees, and $250 mileage charges costs $10,550.
Cash paid is different from cost consumed
Buying may require larger monthly payments but leave an asset at the end. Leasing generally leaves no ownership equity unless a separate purchase is made. Simply adding payments and comparing those sums misses that distinction. This model subtracts estimated end equity from buying cash paid so the comparison reflects value retained.
The resale estimate is uncertain, and it can change the ranking. If you intend to keep the purchased car rather than sell it, the equity is not cash in your account even though it remains part of your net position. Check both economic cost and the actual cash you must spend during the term.
Keep the contract details visible
This calculator does not assess the reasonableness of a lease’s money factor, residual, acquisition charge, or early-termination terms. Enter the complete written quote, including applicable taxes and fees, and read restrictions before comparing. An advertised payment may exclude upfront amounts, tax, or eligibility conditions that materially change the total.
Fuel, insurance, maintenance, repairs, and opportunity cost are excluded from both columns. If those expenses differ between the vehicles, the displayed gap is incomplete. Leasing a new car and buying an older used car may involve different warranties and maintenance exposure. List those differences separately or use ownership-cost scenarios to supplement the comparison.
Questions worth asking
Does this calculate a lease payment from a money factor?
No. Enter the payment from a written quote. The tool compares total costs over an equal period; it does not generate a lease offer.
Should first month’s payment go in upfront cash?
No. The monthly payment is multiplied by the full comparison term. Enter only additional nonrefundable upfront cash to avoid counting the first payment twice.
What if my loan lasts longer than the lease?
The remaining balance at the comparison date is subtracted from resale value to determine equity. The full loan is not assumed paid off early for free.
Is lease-end buyout included?
No. This scenario assumes the leased vehicle is returned. A buyout requires a separate analysis of the purchase option, fees, taxes, and financing.
Does the lower result tell me what to choose?
It identifies the cheaper modeled scenario under your inputs. Mileage flexibility, ownership plans, contract restrictions, and uncertain operating costs still matter.
This is general information, not personalized financial advice. Read the limitations.
