Dealers love to sell the monthly payment, because a lease almost always shows a lower one than a loan on the same car. That comparison is rigged from the start: a lease payment covers only the slice of the car you use up, while a loan payment buys the whole thing. The honest question is what each option costs you, net, over the same stretch of time.
This calculator answers that by tallying everything you pay to lease against everything you pay to buy, then crediting the buyer with the car's leftover value at the end.
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Lease due at signing and monthly payment
Money due at signing bundles your first payment, any capitalized cost reduction (a down payment, in lease language), the acquisition fee, taxes, and assorted drive-off charges. The monthly payment itself has two hidden halves: depreciation — the value the car loses during your term — plus a finance charge based on the lease's money factor. That money factor looks tiny, but multiply it by 2,400 and you get the approximate equivalent APR. A factor of 0.00200, for instance, is roughly a 4.8% interest rate. Ask the dealer for it directly; a marked-up money factor is one of the most common ways a lease quietly costs more than it appears.
Lease term and end-of-term fees
Most leases run 24 to 39 months. Watch what a longer term does: it lowers the monthly payment but extends you into the years where reliability and warranty coverage thin out. The end-of-term costs are where leases bite back. A disposition fee is charged just for returning the car. Mileage overages are billed per mile beyond your contracted allowance and add up fast if you drive more than you guessed. And wear-and-tear assessments cover dings, tire wear, and interior damage beyond "normal." Enter a realistic estimate based on your actual driving, not the optimistic version.
Purchase price and down payment
Use the price you negotiate, not the MSRP — and negotiate the price before any talk of financing or trade-in. A larger down payment lowers your loan and total interest but ties up cash upfront, which is worth weighing against a lease's typically smaller initial outlay. One genuine risk of a big down payment: if the car is totaled or stolen early, your insurer pays the car's value, not your equity, and that down payment can largely evaporate without gap coverage.
Loan APR and term
APR and term set your loan payment and total financing cost. Loan terms have crept longer — six, seven years and beyond — which shrinks the monthly figure while inflating total interest and keeping you "underwater" (owing more than the car is worth) for longer. For a fair fight, the calculator measures buying over the same number of months as the lease, not the full loan term, so you're comparing identical windows of time.
Estimated vehicle value at end of lease term
This is the buyer's trump card. At the end of the comparison window, an owned car still has resale value, while a returned lease leaves you with nothing but the option to start over. The tool credits the buyer with this estimated value — minus any loan balance still owed — as equity, which directly reduces the net cost of buying. Cars that hold value well make buying look strong; models that depreciate steeply narrow the gap and can tip the math toward leasing.
How to use this calculator
Enter the lease terms you've actually been quoted and the purchase alternative for the same vehicle. The result shows the net cost of each path over the lease period so you can see which is genuinely lower for your numbers. Everything is calculated in your browser; nothing you type is uploaded or stored.
Frequently asked questions
If lease payments are lower, how can buying be cheaper?
Because the lease payment only covers depreciation and finance charges — at the end you own nothing. Buying builds equity in a car you keep. Once the calculator credits that leftover value, buying often shows a lower net cost even though its monthly payment was higher. Lower payment, higher lifetime cost is the central illusion of leasing.
When does leasing actually make sense?
Leasing can win when you swap cars every two to three years anyway, when a model depreciates faster than the lease charges you for, or when the lease is structured with a high residual and a low money factor. Some business owners also lease for tax reasons specific to their situation — worth asking a tax professional, since this tool doesn't model that.
Should I put money down on a lease?
Usually keep it low. A larger drive-off payment reduces the monthly figure but rarely reduces the total you pay over the lease — and if the car is totaled early, that upfront money is often unrecoverable. Many advisors suggest minimizing cash down on a lease for exactly this reason.
What's the difference between residual value and resale value?
Residual value is the price the leasing company sets in advance for what the car will be worth at lease end — it determines your payment and your buyout price. Resale value is what the car actually fetches on the open market. When real resale runs above the residual, buying out the lease can be a bargain; this calculator's end-of-term value field captures that real-market figure on the buying side.
Important
This tool provides estimates and general-purpose documents, not financial, tax, legal, or professional advice. Verify important results before relying on them.
Support
Problem with this tool or suggestions for improvement? Please email support@niftyutilities.com.