Lease vs Buy Car Calculator (2026)
Over 36 months, counting the car you would own
Leasing saves $885
Leasing costs less over the lease term, but you end with no car.
Lease
Cheaper by $885$483.10 a month
- Down payment and fees at signing
- $3,995.00
- 36 payments with tax
- $17,391.60
- Fee when you return it
- $395.00
- Cost over 36 months
- $21,781.60
At the end: You hand the car back and have nothing to sell. Extra miles and wear cost more.
Buy with a loan
$685.12 a month
- Down payment
- $3,000.00
- 36 loan payments
- $24,664.32
- Loan still owed
- $15,302.28
- Minus the car you could sell
- −$20,300.00
- Cost over 36 months
- $22,666.60
At the end: You own a car worth about $20,300 and still owe $15,302 on it.
On a $35,000 car with $3,000 down, 6% tax, a 58% residual and a 0.0025 money factor, a 36-month lease runs $483.10 a month against $685.12 on a 60-month loan at 7%. Over the three years leasing costs about $885 less, counting the car you would own.
By Matt Rum. Checked against federal leasing guides on .
Lease terms in plain English
- Capitalized cost
- The price the lease is based on: the negotiated price plus capitalized fees, minus your down payment, trade-in and rebates (the cap cost reduction). Negotiate it like a purchase price.
- Residual value
- What the lessor expects the car to be worth at the end, set as a share of MSRP. A higher residual means lower payments.
- Money factor
- The lease's finance charge rate: the rent charge is the money factor times (adjusted cap cost + residual). Multiplying by 2,400 gives a rough APR equivalent (0.0025 is about 6%), though the Federal Reserve warns it is not a true lease rate.
- Monthly payment
- Depreciation ((cap cost − residual) ÷ months) plus the rent charge ((cap cost + residual) × money factor), plus sales tax in most states.
- End of lease
- Return the car and pay a disposition fee plus any excess mileage or wear charges, or buy it for the residual.
Lease or buy: how they differ
| Feature | Lease | Buy with a loan |
|---|---|---|
| Monthly payment | Lower: you pay only for the value the car loses, plus a rent charge | Higher: you pay off the whole price |
| Sales tax | In most states, on each payment | On the full price, at purchase |
| At the end | Hand it back, or buy it for the residual | You own it and can keep or sell it |
| Mileage | A yearly limit; extra miles are charged | No limit |
| Wear and changes | Charges for excess wear; no modifications | Your car, your choice |
| Ending early | Usually expensive | Sell or trade it in at any time |
| Over many years | Always a payment | Cheapest once the loan is paid off |
| Suits you if | You want a new car every few years and drive within the limit | You keep cars a long time or drive a lot |
A lease payment, step by step
- Adjusted cap cost: $35,000 − $3,000 down = $32,000.00.
- Residual: 58% of $35,000 = $20,300.
- Depreciation: ($32,000.00 − $20,300) ÷ 36 = $325.00.
- Rent charge: ($32,000.00 + $20,300) × 0.0025 = $130.75.
- Base payment $455.75, plus 6% tax of $27.35 = $483.10 a month.
If the car will really sell for 66% of its price after three years instead of 58%, buying comes out about $1,915 ahead. Set it under "Fees and resale value".
How we calculate this
Lease payment = (adjusted cap cost − residual) ÷ months + (adjusted cap cost + residual) × money factor, then sales tax on each payment. An APR you type is turned into a money factor by dividing by 2,400. Lease cost = down payment + fees at signing + all payments + disposition fee.
Buying: the loan covers price + sales tax on the full price + fees − down payment, with the standard payment formula. Buying cost = down payment + loan payments during the lease term + balance still owed − the car's resale value, which defaults to the residual.
We leave out insurance, maintenance, mileage charges and what your down payment could earn elsewhere, and we tax the lease on each payment, as most states do. Some states tax leases up front or credit a trade-in differently. The full method is on our methodology page.
Sources
- Federal Reserve Board, Keys to Vehicle Leasing: sample lease disclosure (federalreserve.gov), checked Nov 10, 2026
- Federal Reserve Board, Keys to Vehicle Leasing: rent charge and money factor (federalreserve.gov), checked Nov 10, 2026
- Oregon Department of Justice: Leasing a vehicle (money factor × 2,400) (doj.state.or.us), checked Nov 10, 2026
- Regulation M, Consumer Leasing (12 CFR part 1013) (consumerfinance.gov), checked Nov 10, 2026
Lease vs buy: common questions
Is it better to lease or buy a car?
Buying usually costs less if you keep the car for many years after the loan is paid off. Leasing can cost less over the first few years, especially when the lessor's residual is high or there is a subsidized money factor, and it suits people who want a new car every few years and drive within the mileage limit.
How is a lease payment calculated?
Payment = (adjusted cap cost − residual) ÷ months + (adjusted cap cost + residual) × money factor, then sales tax in most states. The calculator shows each part.
Do you pay sales tax on a lease?
In most states you pay sales tax on each monthly payment rather than on the full price. A few states tax a lease differently, for example on the full price or the capitalized cost at signing. Check with your state's tax agency or the dealer.
Can I deduct lease payments or lease interest?
Not as a personal deduction. The 2025 to 2028 federal car loan interest deduction applies only to loans, not leases or lease buyouts.
What does the buying cost include?
Your down payment, the loan payments made during the lease term and the loan balance still owed, minus what the car would sell for then. That puts both options on the same footing: at the end of either, you have no car to pay for.