Same car, same months, honest totals: payments, depreciation, mileage, equity
On a $35,000 car (negotiated to $33,500, $2,000 down, 36 months, 57% residual, 0.0025 money factor, 6% sales tax), the lease payment is $476.43 and the 3-year total with fees is $19,851. Buying with a 60-month loan at 7% APR runs $663.54 a month, but after 36 months the car is worth about $19,950 against a $14,820 loan balance, so the net cost is $21,458. Leasing wins that race by $1,606, at 12,000 miles a year. Drive 15,000 and $2,250 of mileage penalties hand the win to buying; at 18,000, buying wins by $2,894. That's the whole lease-vs-buy decision in one lever: how many miles you drive, against how much equity you end up holding.
| Money Factor | Equivalent APR | Rent charge per month on $50,000 (cap + residual) |
|---|---|---|
| 0.00150 | 3.60% | $75 |
| 0.00200 | 4.80% | $100 |
| 0.00250 | 6.00% | $125 |
| 0.00300 | 7.20% | $150 |
| 0.00350 | 8.40% | $175 |
APR = money factor x 2400. Dealers sometimes quote the "lease rate" as 2.5 instead of 0.00250, which is the same number divided by 100 and multiplied by 10; convert everything to a money factor before comparing. The rent charge is applied to the average of cap cost and residual, not the cap cost alone, so a high residual softens the finance charge.
| Term | Typical residual range | Residual of a $35,000 MSRP | Depreciation fee (at $31,500 cap, 36 mo row uses its own term) |
|---|---|---|---|
| 24 mo | 60% – 68% | $21,000 – $23,800 | $321 – $438/mo |
| 36 mo | 50% – 60% | $17,500 – $21,000 | $292 – $389/mo |
| 48 mo | 40% – 48% | $14,000 – $16,800 | $306 – $365/mo |
Depreciation fee = (cap cost $31,500 − residual) / term months: 24-month rows at 60% and 68%, 36-month at 50% and 60%, 48-month at 40% and 48%. Popular, supply-constrained models hold residuals near the top of the band, which is why the same payment goes further on a Civic than on a slow-selling sedan. The manufacturer's lease subvention (a subsidized MF or inflated residual) can beat both bands, so check current lease programs before assuming these ranges.
| Your driving | Mileage overage | Lease 3-yr total | Buy net cost | Winner |
|---|---|---|---|---|
| 10,000 mi/yr | $0 | $19,851 | $21,458 | Lease by $1,606 |
| 12,000 mi/yr | $0 | $19,851 | $21,458 | Lease by $1,606 |
| 15,000 mi/yr | $2,250 | $22,101 | $21,458 | Buy by $644 |
| 18,000 mi/yr | $4,500 | $24,351 | $21,458 | Buy by $2,894 |
Base case: $35,000 MSRP at $33,500, $2,000 down, $700 fees, 36-month lease at 57% residual and 0.0025 MF with 6% tax, versus a 60-month 7% loan, comparing over 36 months with the car valued at residual. The lease allowance is 36,000 miles over the term. This table is the entire argument: below the allowance the lease's lower total wins, above it the overage flips the verdict fast, at $0.25 a mile.
Most lease-vs-buy advice compares a monthly payment to a monthly payment, which is not a comparison. This calculator runs both paths to the same finish line, the end of the lease term, and nets out who holds what when the music stops.
Lease: residual = MSRP x residual %. Cap cost = negotiated price − down payment. Depreciation fee = (cap cost − residual) / months. Rent charge = (cap cost + residual) x money factor. Payment = (depreciation + rent) x (1 + tax). Lease total = down + fees + payments + mileage overage, and the lessee owns nothing at the end.
Buy: loan = price x (1 + tax) − down, amortized at APR over the loan term. At the end of the lease term's months, equity = car's value (estimated at residual) − remaining loan balance. Net cost = down + fees + payments made − equity.
Enter the deal in front of you: sticker, negotiated price, and the down payment the dealer's quoting. Pull the money factor and residual off the lease worksheet (ask; they're required to disclose them in the contract). Set your real annual mileage, not your aspirational one. The verdict updates as you type, and the mileage table shows how close the call is around your number.
The $35,000 SUV again, leased at $33,500 with $2,000 down for 36 months, 57% residual ($19,950), 0.0025 money factor, 6% tax. Cap cost is $31,500. Depreciation: (31,500 − 19,950) / 36 = $320.83. Rent: (31,500 + 19,950) x 0.0025 = $128.63. Payment with tax: ($320.83 + $128.63) x 1.06 = $476.43, and the 36-month total with down and fees is $19,851.
Buying the same car: sales tax on the price goes into the loan, so you finance $33,510 at 7% for 60 months, a $663.54 payment. After 36 payments the balance is $14,820 while the SUV is still worth about $19,950, so the buyer's net cost is down + fees + 36 payments − $5,130 equity = $21,458. Leasing saved $1,606 over the term, but the lessee walks away empty-handed while the buyer is 39 months from owning outright.
Now push the mileage. At 15,000 miles a year the lessee owes 9,000 over x $0.25 = $2,250 at turn-in, and the lease total becomes $22,101: buying wins by $644. At 18,000, buying wins by $2,894. And a 60% residual (a hot model) drops the payment to $448.29 and the lease total to $18,839, widening the lease's win to $2,619. Every lever, priced.
What this calculator deliberately leaves out: maintenance (lease cars are under warranty; owned cars past year 3 aren't), the option value of walking away from a lemon, disposition fees on some leases ($300-$500), and disposition of the buy-side car's actual resale value versus the residual guess. None of those change the direction of the answer in most cases, but they can move a close call.
Over the lease term, buying usually costs less per mile if you keep the car past the loan; leasing usually costs less out-of-pocket per month and can win over exactly the term if the residual is high and your mileage is low. On a $35,000 car (36-month lease, 57% residual, 0.0025 money factor, 6% tax) leasing runs $476.43 a month and $19,851 total, while buying with a 60-month 7% loan runs $663.54 a month and nets $21,458 after selling at lease-end value. But drive 18,000 miles a year and $4,500 of overage flips it: buying wins by $2,894.
Three parts. Depreciation: (negotiated price minus down payment, minus residual value) / months. Rent charge: (cap cost plus residual) x money factor. Tax, in most states, applied to the monthly payment. On a $35,000 car leased at $33,500 with $2,000 down for 36 months at a 57% residual and 0.0025 MF: depreciation is $320.83, rent is $128.63, and with 6% tax the payment is $476.43.
The money factor is the lease's interest rate expressed small: multiply by 2400 to get the equivalent APR. A 0.00250 MF is a 6% APR, 0.00350 is 8.4%, and 0.00150 is 3.6%. If a dealer quotes the money factor as something like 2.5, that's the APR divided by ten, so 2.5 means 0.00250. Always convert before comparing a lease's financing cost to a loan rate.
Often. A 36,000-mile allowance over three years covers 12,000 a year. At 15,000 a year you're 9,000 over, which is $2,250 at the typical $0.25 per mile, and at 18,000 you're $4,500 in penalties, payable at turn-in. Buying has no mileage meter. If your annual miles vary or run above 12-15k, either negotiate a higher allowance up front (15k typically adds $20-$30 a month) or buy.
The comparison horizon. Over exactly 36 months, the buyer has paid 36 loan payments but still holds a car worth roughly the residual value; subtract that equity and the net cost is competitive. From month 37 on, the lessee starts paying for a whole new car while the buyer's remaining payments shrink the gap and eventually stop. Buying's advantage compounds the longer you keep the car after payoff.