Home > Auto > Lease vs Buy a Car
See what the numbers mean. Learn how the comparison works. Leave with a wider view of the decision.
Enter one vehicle. We use the Federal Reserve's published lease-payment methodology, then adjust both sides for sales tax, running costs, equity built, and the opportunity cost of your cash.
Lease vs Buy a Car is a decision-making model, not a financing calculator. It estimates the relative cost of leasing versus buying using the Federal Reserve's lease formula plus clearly stated modeling assumptions.
⚠ Estimates only, not financial advice — see the note below the results for details. US vehicles only for now.
Estimate only — not financial, legal, or investment advice.
Each line already includes every adjustment above it — this isn't a list to add up. Compare using the bottom line only.
Estimates only, not financial advice. Lease payment uses a depreciation charge (adjusted cap cost minus residual value, divided by term) plus a rent charge (money factor times cap cost plus residual) — a methodology consistent with the Federal Reserve's published consumer guide to vehicle leasing. Money factor is derived from your entered APR-equivalent (money factor = APR ÷ 2,400, the standard industry conversion). Residual value is based on MSRP (sticker price), the industry-standard basis, not your negotiated price. Sales tax on the lease is applied monthly to the payment, replacing the upfront tax — this is how many states tax leases, though rules vary and some states (e.g. Texas) instead tax the leasing company upfront, a cost we amortize across the lease term. Buy-side sales tax is applied upfront and financed into the loan. If you plan to keep the car longer than the loan term, we average the loan payment across your full ownership period rather than assuming it continues forever. Equity built values the vehicle's expected resale value (adjusted for your annual mileage), spread evenly across your ownership period; a leased vehicle is returned, so it builds none. Note that the buy and lease periods you enter don't have to match — if they differ, this compares each option's own average monthly cost over its own period, and doesn't model what happens after a shorter lease ends (e.g. a new lease or purchase).
Lease vs Buy a Car takes one vehicle and runs both paths through four stages to estimate the real-terms monthly cost of each.
Buying uses a standard loan amortization on the financed amount (price minus down payment, plus sales tax); if you plan to keep the car longer than the loan term, we average the payment across your full ownership period. Leasing uses a depreciation charge (how much the car's value drops during your lease, based on MSRP-derived residual value, divided by the term) plus a rent charge (the money-factor equivalent of interest), plus sales tax where your state taxes lease payments monthly — a structure consistent with the Federal Reserve's published consumer guide to vehicle leasing.
Both sides add annual insurance and maintenance. Leasing also spreads in your acquisition and disposition fees, the cost of any miles you're likely to drive over your mileage allowance, and — in states that tax the leasing company upfront instead of monthly — an amortized share of that upfront tax.
When you buy, you eventually own an asset — we spread its expected resale value (adjusted for your annual mileage) evenly across your ownership period as a credit. A leased car is handed back at the end of the term, so leasing builds no equity at all.
Both a down payment and a lease's cap cost reduction tie up cash that could otherwise be invested. We add back the monthly opportunity cost of that capital, valued at the investment return rate you enter, to get each option's estimated real-terms monthly cost.
A few terms worth knowing before you compare — this site is built to help you see the fuller picture, not just crunch numbers.
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A few more angles worth exploring — the numbers above are only part of the full picture.
No. Lease vs Buy a Car gives a directional estimate to help you think through a decision, not a substitute for a financial advisor or the actual numbers in a lease or loan offer. Real deals vary by lender, dealer markup, and your credit profile.
We currently support a set of major US cities. Use the "View supported cities" button at the top of the page for the full list — we add more based on demand. This calculator is US-only for now.
The money factor is how the leasing industry expresses the interest-like charge on a lease, usually as a small decimal like 0.00188. It's mathematically related to APR by a standard conversion: money factor = APR ÷ 2,400. The overall lease-payment structure — depreciation charge plus rent charge — is consistent with the Federal Reserve's published consumer guide to vehicle leasing, though the Fed does not mandate a single required formula.
When you buy a car, most states tax the full purchase price upfront. When you lease, most states instead apply a monthly tax on your lease payment, replacing that upfront tax — so we apply your city's sales tax rate to the monthly lease payment instead of the full vehicle price. A few states (currently Texas in our city list) work the other way: the leasing company pays motor vehicle tax on the vehicle's full price upfront, and that cost is typically passed through to you as a due-at-signing charge rather than a monthly tax — we model that as an upfront cost spread over your lease term instead.
Financing a car eventually gives you an asset you can sell — that resale value offsets what you spent. A leased car always goes back to the leasing company at the end of the term, so there's no resale value to offset, no matter how well you maintained it.
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Rate data: 2026