Lease vs Buy Calculator

Multiply it by 2,400 — that is the approximate APR hiding inside. A 0.00208 money factor is about 5.0% APR. The factor feeds the rent charge: (cap cost + residual) × money factor, charged every month on top of the depreciation portion. If a dealer's factor converts to an APR well above what banks offer you for a loan, the lease is carrying an expensive hidden rate.

Almost always, yes — and the chart above shows why. A lease payment never ends: when one lease finishes, the next one starts, with a fresh down payment and fees. A loan ends, and then you drive a paid-off car for free (aside from running costs). Over short horizons of 2–4 years leasing is often cheaper out-of-pocket, which is exactly what the 3-year and 5-year check-points measure.

No. Lease payments buy you the use of the car, not ownership of it — at the end you hand it back with nothing to show for the payments. The one exception is the buyout option: most leases let you purchase the car at the residual value, and if the car is worth more than that on the open market, the difference is equity you can capture.

A fee — typically $300 to $500 — charged when you return the car at lease end, supposedly to cover inspection and resale prep. It is often waived if you lease another car from the same brand or buy the car outright, and it is sometimes negotiable up front. The calculator counts it at the end of every completed lease cycle.

Usually yes, at the residual value written into the contract plus any purchase-option fee and taxes. It can be a smart move when the car's market value is higher than the residual — you buy below market. It is a poor move when the car is worth less than the residual, unless you simply love the car; in that case handing back the keys is the better deal.

Most leases include GAP coverage in the payment already — check the contract rather than assuming. GAP covers the difference between what you owe on the lease and what insurance pays if the car is totaled or stolen early on, when that gap is largest. On a loan, GAP is usually an add-on you have to buy separately.

They are the fine print that breaks lease deals. Standard leases allow 10,000–12,000 miles a year, and overage runs 15–30 cents a mile — 5,000 extra miles a year at 25 cents is $1,250 a year, which can erase the lease's payment advantage. If you drive a lot, either negotiate a high-mileage lease up front or buy; this calculator assumes you stay within the allowance.

In many states, effectively yes: you pay sales tax on the lease payments (or the cap cost) and then sales tax again on the buyout price. A few states give you credit for tax already paid. Because it varies by state, the calculator leaves sales tax out of both sides — check your state's rules before comparing a lease-then-buy plan against buying outright.

It is expensive. Early termination usually means paying the remaining payments plus fees, or finding someone to assume the lease through a transfer service (which the leasing company must approve, and which often comes with its own fee). A loan, by contrast, can be escaped any time by selling the car and paying off the balance. Flexibility has real value — price it before you sign.