Compare a financed vehicle purchase with a lease over the same period. Adjust the loan rate, resale value, residual value, money factor, taxes, fees and upfront payments to explore different scenarios.
The comparison uses the lease term as the period for evaluating both options.
The purchase calculation subtracts estimated vehicle equity at the end of the comparison period.
Resale value, lease residual and financing terms are especially important.
Buying with an auto loan means you are financing ownership of the vehicle. As the loan balance declines, you may build equity if the vehicle is worth more than the remaining debt.
Leasing generally means paying for the vehicle's expected depreciation during the lease period, plus a financing charge, taxes and applicable fees.
At the end of the comparison period, a purchased vehicle still has value. This calculator subtracts estimated vehicle equity from the amount you have spent so the buy side is not treated as though the vehicle were worth zero.
The residual value is the estimated vehicle value used by the leasing company at the end of the lease. It is commonly expressed as a percentage of MSRP.
A money factor is used to calculate the financing portion of a lease. Multiplying the money factor by approximately 2,400 gives a rough APR equivalent for easier comparison, although the two are not identical.
Lease contracts can include mileage limits and charges for excess wear. Those potential costs are not automatically included in this calculator because they depend on the individual lease and how the vehicle is used.
Actual lease taxation, acquisition fees, disposition fees, incentives, mileage charges and purchase-option terms vary by contract and location.
The calculator compares estimated costs over the same number of months. On the purchase side, it accounts for loan payments and estimated vehicle equity. On the lease side, it estimates depreciation, rent charge, taxes, fees and upfront capitalized-cost reduction.
A purchased vehicle is an asset that may still have value at the end of the comparison period. Subtracting estimated equity gives a more meaningful cost comparison than counting payments alone.
Residual value is the estimated value assigned to the vehicle at the end of the lease. It is commonly expressed as a percentage of MSRP and affects the depreciation portion of the lease payment.
The money factor is used to determine the financing or rent charge on a lease. Multiplying the money factor by approximately 2,400 provides a rough APR-style equivalent for comparison.
No. Mileage allowances and excess-mileage rates vary by lease. Add any expected mileage or wear charges separately when evaluating a specific offer.
Not automatically. Some leases charge a fee when the vehicle is returned. Review the lease offer and include any known additional costs when comparing options.
A lease payment is generally based largely on the estimated depreciation during the lease term plus financing charges, rather than financing the entire vehicle purchase price for ownership.
Not necessarily. Monthly payment is only one component. Upfront cash, vehicle equity, resale value, mileage charges, fees and what happens at the end of the term can all change the comparison.