6+ year ownership, high mileage, want to modify, or want zero monthly after loan payoff.

Lease residual value?

Set by manufacturer. Higher residual = lower lease payment. 50-60% residual at 36 mo is typical.

Lease "interest rate" expressed as decimal: APR / 2400. 0.00125 money factor = 3% APR.

Many leases let you purchase at residual at end. Sometimes good deal if used-car market is hot.

Lease vs Buy Car Comparison

Compare 36-mo lease total cost vs. 5-yr purchase + resale. Same out-of-pocket cash basis.

Result

Cheaper option

Lease

Lease saves $9,880 over the comparison period.

Vehicle price$40,000
Lease total cost$19,200
Lease down$3,000
Lease payments$16,200 (36 × $450)
Buy total out-of-pocket$29,080
Buy down$5,000
Buy total payments$42,080 (60 × $701)
Resale recovered−$18,000
Difference$9,880
CheaperLease

Step-by-step

Lease total = down + monthly × months = $3,000 + 36 × $450 = $19,200.
Buy out-of-pocket = down + total payments − resale = $5,000 + $42,080 − $18,000 = $29,080.
Lease is cheaper by $9,880.

How to use this calculator

Enter lease + buy terms.
Estimate resale at end of buy term (KBB/Edmunds).
Compare totals.

About this calculator

Lease vs. buy is mostly an asset-ownership question. Lease: lower monthly + always-new car + no resale hassle, but you own nothing at the end. Buy: higher monthly but you own the car and recover residual value at sale. Over 6+ years buying typically wins financially. Over 3 years lease is often cheaper. Lease usage limits (10-15k miles/yr) matter — over-mileage charges can be $0.20-0.30/mi.

Frequently asked

Short ownership horizons (3 years), high-mileage business use isn't needed, or you want to always drive new. Lower out-of-pocket monthly = better cash flow.