Lease vs Buy Car 2026: Which One Actually Saves You More Money?
Leasing has lower monthly payments but buying builds equity. Here is how to run the real numbers and decide which option costs less over the full term.
Read articleLease vs Buy Car Calculator
Compare the total cost of leasing versus buying any vehicle side by side in seconds.
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How it works
Enter the vehicle basics
Type the vehicle price (MSRP), any down payment, and your local sales tax rate. These feed both the lease and the buy calculation.
Add your loan and lease terms
Fill in the buy side — loan term and APR — and the lease side — term, money factor, and residual value. Defaults reflect typical 2026 deals.
Compare the real numbers
See monthly payments for both options, the total cost of each over the full term, and which choice saves you money once resale value is counted.
How Lease vs Buy Cost Is Calculated
A lease payment has two parts. The depreciation charge is the capitalized cost minus the residual value, divided by the lease term — it pays for the value the car loses while you drive it. The finance charge is the capitalized cost plus the residual value, multiplied by the money factor — it is the lease's version of interest. The money factor looks tiny, but multiply it by 2,400 and you get its approximate APR, which lets you compare lease financing directly against a loan rate. Buying uses standard loan amortization: the monthly payment is the financed amount spread over the term at the monthly interest rate. But the monthly payment is not the true cost. When you buy, you own an asset, so the real cost is your total payments minus the car's resale value at the end of the term. That resale value is why buying can be cheaper over the long run even when its monthly payment is higher than a lease — at the end you still have something worth selling, whereas a lease leaves you with nothing.
Lease Payment = [(Cap Cost − Residual) ÷ Term] + [(Cap Cost + Residual) × Money Factor]
Buy Payment = P × [r(1+r)ⁿ] ÷ [(1+r)ⁿ − 1]Example
A $35,000 car with $2,000 down. Lease: 36 months, money factor 0.00125, 55% residual ($19,250), $650 acquisition fee. Monthly lease ≈ $499 and total lease cost ≈ $20,905. Buy: 60 months at 6.5% APR. Monthly buy payment ≈ $694 and, after subtracting an estimated $15,530 resale value, the net buy cost ≈ $28,088. Over these terms leasing costs roughly $7,180 less out of pocket — though the buyer ends up owning a car still worth about $15,500.
Worked examples
| Scenario | Calculation | Result |
|---|---|---|
| Scenario A — Budget sedan, short lease vs long loan | $24,000 MSRP · Lease 36mo @ 0.00120 MF, 58% residual · Buy 72mo @ 7% APR | Lease ≈ $300/mo, buy ≈ $400/mo; buy wins on net cost thanks to resale value |
| Scenario B — Luxury SUV where lease wins on monthly cost | $68,000 MSRP · Lease 36mo @ 0.00150 MF, 60% residual · Buy 60mo @ 6.5% APR | Lease ≈ $850/mo vs buy ≈ $1,330/mo; lease far cheaper month to month |
| Scenario C — High-mileage driver where buying wins | $32,000 MSRP · Lease 36mo (mileage overage likely) · Buy 60mo @ 6% APR, kept 8 yrs | Buying wins — no mileage penalties and value continues past the loan payoff |
| Scenario D — Low down payment scenario | $40,000 MSRP · $0 down · Lease 39mo @ 0.00125 MF · Buy 72mo @ 6.5% APR | Lease ≈ $520/mo, buy ≈ $640/mo; lease lowers upfront cash but builds no equity |
| Scenario E — End of lease vs ownership equity | $45,000 MSRP · Lease 36mo (return car, $300 disposition) · Buy 60mo (own outright) | Lease ends with $0 equity; buyer owns a car worth ~$22,000 after the loan term |
| Scenario F — Three short leases vs one long ownership | $30,000 MSRP · Three back-to-back 36mo leases (9 yrs) vs one 60mo loan kept 9 yrs | Repeated leasing costs more over 9 years than buying once and driving it paid off |
Quick facts
- The average new-car lease payment in early 2026 is about $659 per month.
- The average new-car loan payment in early 2026 is about $682 per month.
- The average transaction price of a new car in 2026 is roughly $48,000.
- A higher residual value lowers the depreciation portion of a lease, making the monthly payment cheaper.
- Most leases cap mileage at 10,000–15,000 miles per year, with overage charges of 15–30 cents per mile.
- Money factor × 2,400 gives the lease's approximate annual interest rate.
Editorial Team
Auto Finance Content Reviewers
- Calculations verified against standard auto lease formulas used by dealerships and financial institutions
Our editorial team reviews every calculator for accuracy against the standard lease and loan formulas used across the auto industry. We focus on plain-language explanations so readers can compare leasing and buying with confidence. Figures are estimates and not a substitute for personalized financial advice.
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View all →Frequently asked questions
Leasing almost always has the lower monthly payment, but buying is usually cheaper over the long run because you keep the car's resale value. The right answer depends on the price, the loan APR, the lease's money factor and residual, and how long you keep the car. Run both with your own numbers — the calculator compares the total cost of each, not just the monthly payment.
The money factor is the lease's interest rate expressed as a small decimal, such as 0.00125. It sets the finance charge portion of your payment. To convert it to an approximate APR, multiply by 2,400 — so 0.00125 is roughly 3% APR. A lower money factor means cheaper lease financing.
Residual value is the car's projected worth at the end of the lease, set as a percentage of MSRP by the leasing company. A higher residual means the car loses less value during the lease, so the depreciation you pay for is smaller and your monthly payment is lower. Residual value is one of the biggest drivers of how cheap a lease is.
You typically return the car, pay any disposition fee, and settle charges for excess mileage or wear and tear. You may also have the option to buy the car for its residual value. Unlike buying, you walk away with no ownership equity.
Usually not. Leases cap annual mileage, and going over costs roughly 15–30 cents per mile, which adds up fast for high-mileage drivers. If you drive well above 12,000–15,000 miles a year, buying — where mileage does not trigger penalties — is often the better financial choice.
An acquisition fee is an upfront administrative charge the leasing company adds to start the lease, commonly $595–$995. It is sometimes rolled into the capitalized cost rather than paid in cash. This calculator includes it in the total lease cost.
A disposition fee is charged at the end of a lease to cover cleaning and reselling the returned car, typically $300–$400. It is often waived if you lease or buy another vehicle from the same company. The calculator adds it to the total lease cost.
Generally no — the residual is set by the leasing company or its financial arm and is not negotiable. What you can negotiate is the capitalized cost (the price of the car) and sometimes the money factor. Lowering the cap cost is the most reliable way to reduce a lease payment.
A large down payment lowers your monthly lease payment, but it is risky: if the car is totaled or stolen early, that money is usually not refunded. Many experts suggest keeping the down payment small on a lease and instead negotiating a lower capitalized cost.
Multiply the money factor by 2,400. For example, a money factor of 0.00125 equals about 3% APR, and 0.00250 equals about 6%. This conversion lets you compare a lease's financing cost directly against a car loan's interest rate.
No. This calculator provides estimates for general informational purposes only and does not account for every fee, tax rule, or incentive. For a major purchase, confirm the exact figures with the dealer and consider speaking with a qualified financial advisor before deciding.