How it works
Both options are compared over the same period, which should match the lease term you were quoted. Buying assumes you sell the car at the end and recover the equity. If the loan balance is more than the resale value, the equity is negative and raises the modeled cost of buying. A paid-off car still has a residual value.
The lease inputs start from the monthly payment you were actually quoted, instead of trying to work backward from a money factor. Include monthly tax in that payment. Extra upfront cash leaves out the first monthly payment, since every installment is already counted; otherwise it would be counted twice. Leave out 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 car with $2,000 down and a zero-rate, 60-month loan. After 36 months you've paid $10,800 and owe $7,200. If it's worth $12,000, your equity is $4,800 and buying costs you $8,000 net. A lease at $250 a month for 36 months, plus $1,000 upfront, $300 in fees and $250 in mileage charges, costs $10,550.
Why is cash paid different from cost?
Buying may mean bigger monthly payments, but you end up with an asset. Leasing usually leaves you with no equity unless you buy the car separately. Just adding up payments and comparing the sums misses that. This model takes estimated end equity off the cash you paid to buy, so the comparison reflects the value you keep.
The resale estimate is uncertain, and it can change which option wins. If you plan to keep the car rather than sell it, that equity isn't cash in your pocket, even though it's part of your net position. Look at both the economic cost and the actual cash you'd have to spend during the term.
What lease details should I keep in view?
This calculator doesn't judge whether a lease's money factor, residual, acquisition charge or early-termination terms are reasonable. Enter the full written quote, including taxes and fees, and read the restrictions before you compare. An advertised payment may leave out upfront amounts, tax or eligibility conditions that change the total a lot.
Fuel, insurance, maintenance, repairs and the opportunity cost of your money are left out of both columns. If those differ between the two cars, the gap you see is incomplete. A new leased car and an older used car may come with different warranties and repair exposure, so list those differences separately or use the ownership-cost scenarios alongside this one.
Questions worth asking
Does this work out a lease payment from a money factor?
No. Enter the payment from a written quote. The tool compares total costs over an equal period and doesn't create a lease offer.
Should the first month's payment go in the upfront cash field?
No. The monthly payment is multiplied by the full comparison term, so enter only the extra nonrefundable upfront cash. Otherwise the first payment is counted twice.
What if my loan runs longer than the lease?
The balance still owed at the comparison date is subtracted from the resale value to get your equity. The calculator doesn't assume the rest of the loan disappears for free.
Does the comparison include a lease-end buyout?
No. It assumes you return the leased car. Buying it out at the end needs a separate look at the purchase price, fees, taxes and financing.
Does the lower result tell me which to choose?
It shows which option is cheaper under your inputs. Mileage flexibility, how long you want to keep the car, contract restrictions and uncertain running costs still matter.
This is general information, not personalized financial advice. Read the limitations.
