CARMIND

Tools

Lease vs buy calculator

Plug in the same car on both sides. The calculator equalizes the holding period and tells you which costs less — including the resale value you'd have if you bought.

The car

$
%

State + local combined.

How long you'd actually keep the car. Buying wins more often as this gets longer.

Lease

× 2,400 for ~APR. 0.00250 ≈ 6%.

%

Of MSRP at lease end.

$
$

Captive lender, one-time.

$

Charged at return.

Buy

%
$
%

12% compound is typical.

Lease

Total cost over holding period

$28,508

≈ $791.88/mo

Monthly payment
$697.58
Depreciation portion
$500.00
Finance (rent) charge
class="relative z-10"55.00
Sales tax
$42.58
Term × monthly
$25,113
+ Cash due at signing
$3,000
+ Disposition fee at end
$395

Buy

Better deal

Total cost over holding period

$21,941

≈ $609.47/mo

Monthly payment
$793.50
Amount financed
$39,600
Cash down
$3,000
Payments during 36 mo
$28,566
Loan balance after 36 mo
class="relative z-10"7,634
Estimated resale value
−$27,259

Recommendation

Buying saves you about $6,567 over 36 months

Buying is the cheaper path at this holding period. The resale value at the end of the holding window does a lot of the work — if you'd actually trade earlier than entered, recheck with the shorter horizon.

How this comparison works

The lease side computes the standard monthly: depreciation (cap cost minus residual, divided by term), finance charge (cap cost plus residual, times money factor), and sales tax on the monthly. Total cost equals term × monthly plus the cash due at signing plus the disposition fee at lease end.

The buy side computes the loan against the negotiated price plus sales tax, projects the loan balance forward to the holding period, and subtracts an estimated resale value at the same point. The default 12% compound annual depreciation matches mainstream sedan and SUV trajectories per Black Book and ALG residual data. For Toyota and Honda you can drop to 10%; for luxury sedans use 13–15%; for many EVs and high-mileage performance cars 17–20%.

Key caveat: this compares one lease cycle against one buy cycle. If you'd actually lease repeatedly (every 36 months for the next 9 years), multiply the lease number by 3 and compare to buying once and keeping for 9 years. The buy side scales much better over long horizons.

Frequently asked

What is money factor?
Money factor is the lease equivalent of an interest rate, written as a small decimal. Multiply by 2,400 to convert to an approximate APR. A money factor of 0.00125 is roughly 3.0% APR. Look up the current month's money factor on the lender's site before negotiating.
What is residual value?
Residual is the lender's projection of what the vehicle will be worth at the end of the lease, expressed as a percentage of MSRP. Higher residual means lower monthly payments. Toyota, Honda, and Lexus typically get the highest residuals because of their resale-value reputation; luxury sedans and EVs typically the lowest.
Why does the recommendation depend on holding period?
A lease is always more expensive per month than buying — but buying only wins overall if you keep the car long enough to amortize the depreciation. If you trade every 3 years, leasing often wins. If you keep cars 7+ years, buying almost always wins. The calculator equalizes both sides at the holding period you enter.
Do I need to put cash down on a lease?
No. Some leases advertise "$X due at signing" but most of that is just the first month plus fees. Putting extra cash down on a lease is risky — if the car is totaled in month two, you lose the down payment. Use multiple security deposits (MSDs) instead, which lower the money factor and are refunded at lease end.
What annual depreciation rate should I use?
Default is 12% compound per year, which produces about 38% depreciation over three years and matches most mainstream sedans and SUVs. Use 10% for Toyota/Honda/Lexus, 13–15% for luxury sedans, 17–20% for many EVs and high-mileage performance cars.