About the Lease vs Buy vs Finance Comparator
The lease-or-buy question is usually answered with a payment comparison, which is exactly the frame the finance office prefers. This is the honest three-way: lease arithmetic done properly (money factor converted to APR in the open, residual, acquisition and disposition fees, and the per-mile overage penalty most calculators ignore), against a real amortising loan with its equity counted, against cash — all three totalled at the same horizon.
The engine passed the batch-9 Node suite before shipping: the textbook $393.33 money-factor example lands to the penny, the closed-form loan balance matches month-by-month simulation across 300 random loans, and costs are verified monotone (no free months).
How to Use the Lease vs Buy vs Finance Comparator
Start from one negotiated price and fill in each path’s real terms — the lease’s money factor (or APR; the tool converts live), residual and fees plus your honest annual mileage; the loan’s rate and term. The comparison totals all three at the lease horizon with the financed car’s equity properly credited, then names the winner at your numbers and by how much.
The Three Tricks This Tool Refuses
Payment-to-payment comparison: a $393 lease payment against a $580 loan payment tells you nothing until the loan’s equity enters the ledger. The hidden rate: a money factor of 0.0030 is 7.2% APR, and it is negotiable exactly like an APR. The ignored odometer: overage pricing means your true annual mileage is a lease input, not a footnote — at 25¢/mile, 5,000 extra miles a year on a 36-month lease is $3,750 nobody mentioned at signing.
Related tools: the Auto Loan Calculator for the loan in isolation, the Depreciation Calculator for the curve leases price at wholesale, and the True Cost of Ownership Calculator for fuel, insurance and everything this comparison holds constant. Browse every Auto & Vehicle tool for more.
Planning arithmetic, not financing advice. Simplifications, disclosed: vehicle value runs linearly between price and the lease residual (the two real anchors); sales tax is applied to lease payments (most states) and left off the purchase paths where treatment varies; early lease exits ignore contract-specific termination penalties; business-use tax treatment differs and belongs with your accountant. Cash’s opportunity cost is real and yours to weigh.
Frequently Asked Questions
How is a lease payment actually calculated?
Two parts, added. Depreciation: (net capitalised cost − residual value) ÷ months — you pay for the slice of the car you use up. Rent charge: (net cap cost + residual) × money factor — the financing cost, charged on the sum because you're borrowing the whole car while it depreciates. The classic worked example: $30,000 cap cost, $18,000 residual, 36 months, 0.00125 money factor → $333.33 depreciation + $60 rent = $393.33 before tax — exactly what this engine returns, because that example is one of its validation anchors.
What is a money factor?
The lease world's obfuscated interest rate. Multiply by 2400 and you get the APR: a money factor of 0.00125 is 3.0% APR; 0.0030 is 7.2%. Dealers quote it as "the factor" precisely because 0.0030 sounds tiny while 7.2% invites negotiation. This tool accepts either form and always shows both — knowing the conversion is worth real money at the desk, and it's printed on the subscriber cheat sheet.
Why does the comparison run to the lease horizon?
Because that's the only honest meeting point. At month 36 the lease ends with defined costs (payments + fees + any overage); the financed car has made 36 of its 60 payments AND holds equity — value minus remaining loan balance — which the comparison credits at the anchor value the lease itself defines (the residual). Comparing "lease payment vs loan payment" without the equity is the standard dealership sleight; this tool refuses it.
How bad are mileage overages really?
Typically 15–30 cents per mile past the allowance, charged at turn-in. Five thousand miles a year over a 12k allowance at 25¢ is $3,750 across a 36-month lease — routinely enough to flip the lease from cheapest to most expensive, which is why the subscriber slider exists. The reverse trap: unused miles are usually worth nothing back. Leases price a mileage band, and living outside it in either direction is expensive.
When does each option actually win?
The honest pattern from the arithmetic: cash wins on pure cost whenever you have it (no rent charge, no interest) — its real cost is opportunity, not price. Financing wins for keepers: the cost curve bends down after payoff, and years 6–10 of a paid-off car are the cheapest driving there is. Leasing wins on cash flow and predictability inside the mileage band — you're renting depreciation at wholesale — and for people who genuinely replace cars every 2–3 years anyway. The tool's job is showing which pattern YOUR numbers fit.
