Take a $32,000 sedan for 36 months. Leasing it costs $20,612 all in; buying it with a 60-month auto loan costs a net $19,602 once you sell it for its estimated $19,374. The car lease vs buy answer is usually that close, and it flips on four numbers: the money factor, the residual value, the miles you drive and how your state taxes the contract.
Enter the negotiated price and the terms from the dealer’s quote (months, cash down, money factor, residual, miles allowed, fees), then the loan you would take to buy a car instead. Leave the rate or residual blank and the tool uses a typical figure for your credit range and vehicle type. You get each side’s total, the true cost per month, the cash due at signing and a break-even resale value.
Car Lease vs Buy Calculator
Enter the price, the leasing quote and the loan you would take instead. The tool prices both ways over the same months: every payment, fee and mileage charge on the leasing side, and on the other the loan interest, sales tax and fees minus what the vehicle is worth when the contract would have ended.
Side by Side
Estimates only, not a quote, an offer of credit or a leasing offer. Built from 2026 planning figures: statewide sales tax rates and each state's method of taxing leased vehicles, typical title and documentation fees, new vehicle APR by credit range and depreciation curves by vehicle type. Registration, insurance, fuel and upkeep are left out because they are about the same either way. Excess wear charges, local taxes, incentives and the market when the term ends will move the real numbers. Nothing here is financial advice.
Car Lease vs Buy on the Same $32,000 Sedan
Both columns use the national average sales tax (5.75 percent), a 7.0 percent rate on the lease and the car loan, and the same resale curve: the sedan is worth $19,374 at month 36 either way.
| Over 36 months | Leasing | Buying (financed) |
|---|---|---|
| Due at signing | $3,047 | $4,000 down |
| Monthly payment | $492 with tax | $600 |
| Value used up | $13,471 ($2,000 down plus $11,471 through the payments, incl. the $845 acquisition fee) | $12,626 |
| Rent charge or interest | $5,273 | $4,697 |
| Sales tax | $1,078 | $1,840 |
| Doc, title and turn-in fees | $790 | $440 |
| Net cost | $20,612 | $19,602 |
Buying wins by $1,009, about $28 a month. The lower monthly payment is real, $108 under the loan, but it pays for the depreciation during the lease term plus rent, and none of it comes back. The loan’s higher monthly payment builds equity you collect when you sell, and its $4,697 of interest is the cost of financing that the $5,273 rent charge mirrors on the lease side. Pay cash and buying a vehicle nets $14,906, though that money earns nothing else for three years.
Why a Lease Costs More at the Same Rate
A money factor is the lease’s interest rate written as a decimal. Multiply it by 2,400 for the equivalent APR, as Capital One’s guide explains: 0.00292 is 7.0 percent. The monthly rent charge is (capitalized cost plus residual value) times the money factor, so leasing costs more even at the same rate:
- Rent is charged on $50,219 (cap cost plus residual) for all 36 months, including the residual the lessor (the lender that owns the vehicle) never lends you.
- An acquisition fee ($595 to $1,095, $845 here) and a turn-in fee ($350) exist only on the leasing side.
- At turn-in you hand back $19,374 of value. A buyer who sells gets it in cash.
Tax pulls the other way: leasing taxes only what you use, $1,078 against $1,840. The break-even resale value is $18,365. If the sedan sells for more than that, buying wins.
Check the Dealer’s Lease Payment Yourself
Every lease payment is two pieces, the value you use up and rent, and five steps rebuild it from the quote. Our rule for any quote: convert the money factor before you even look at the payment, because the payment is where a marked-up rate hides.
- Convert the money factor. 7.0 divided by 2,400 is 0.0029167, which the quote rounds to 0.00292. If it converts to more than your preapproved car loan rate, ask for the lender’s base rate, since dealers can often mark it up.
- Build the adjusted cap cost: $32,000 price plus the $845 acquisition fee minus $2,000 down is $30,845.
- Divide the depreciation by the term: ($30,845 minus the $19,374 residual) over 36 months is $318.64.
- Add rent: ($30,845 plus $19,374) times 0.0029167 is $146.47. The base monthly lease payment is $465.11, or $491.85 with 5.75 percent tax, the $492 in the table.
- Total the cash due: $2,000 down, the $492 first payment, $115 tax on the down payment and $440 doc and title fees come to $3,047.
The residual is usually set as a percentage of MSRP, not of what you pay, so every dollar you negotiate off the price comes straight out of the depreciation and the rent. A quote whose numbers will not rebuild this way has a fee or add-on buried in the cap cost.
When Leasing a Car Wins
Subsidized Money Factors and High Residuals
Leasing comes out ahead when the manufacturer subsidizes the deal. At a 0.00150 money factor (3.6 percent APR) and a 65 percent residual, the same sedan costs $16,477 to lease, $3,126 less than buying at 7.0 percent. The cheap rate alone, at the original $19,374 residual, already puts leasing $1,699 ahead. A residual set above what the vehicle will fetch is a bet the leasing company loses, and only the lessee collects it.
How the Term Changes the Car Lease vs Buy Gap
Over 24 months the gap shrinks to $362. Stretch to 48 and buying leads by $1,942, because an older vehicle loses less each year, and once the loan is paid you keep driving with no car payments at all. Someone who wants a new vehicle every two to three years and stays under the number of miles allowed may find leasing the best choice; a long-term keeper rarely does. A two- or three-year-old used car skips the steepest years of value loss entirely, a third route the new, used or CPO comparison prices out.
How Your State Taxes the Lease
Most states tax each monthly payment and the cash down. A few tax all the payments at signing, and some tax the full price. Same deal, six states:
| State | Method | Leasing tax | Buying ahead by |
|---|---|---|---|
| US average | Each payment, 5.75% | $1,078 | $1,009 |
| Pennsylvania | Each payment, 6% plus 3% lease tax | $1,687 | $1,512 |
| New York | All payments, at signing | $750 | $1,361 |
| Georgia | 7% TAVT on depreciation | $943 | $385 |
| Virginia | Full price, 4.15% | $1,328 | $1,793 |
| Texas | Full price, 6.25% | $2,000 | $1,771 |
Texas taxes the leasing company’s purchase price, per the Texas Comptroller, so a Texas lessee pays the same tax as a buyer. Rates are statewide, matching the car sales tax calculator.
Disadvantages of Leasing: Miles, Wear and Ending Early
The Federal Trade Commission (FTC) says the annual mileage limit in most standard leases is 15,000 or less, and overage typically runs 15 to 25 cents a mile. Drive 15,000 miles per year on a 12,000-mile contract and you owe $1,800 at turn-in, turning a $1,009 gap into $2,809.
At the end of the lease term you also pay for excessive wear and tear. Need to end the lease early? Lease contracts set an early termination charge, and it can be substantial. The lease agreement lists a buyout price (the residual), so you can purchase the vehicle rather than return it, which pays when the value of the car is higher. Most leases end inside the factory warranty; an owner keeping a vehicle eight years pays for repairs after it lapses.
Pros and Cons of Leasing
- Pro: a lower monthly payment, $148 less than a new car loan in Experian’s Q2 2026 data, when 23.75 percent of new vehicles were leased.
- Pro: no resale risk. If the vehicle holds its value worse than the residual, the lessor takes the loss.
- Con: you may keep paying indefinitely, since each new contract restarts the payments. An owner’s payments stop once the loan is paid.
- Con: mileage caps, wear charges and exit fees.
Check your model’s curve in the car depreciation calculator to judge the residual. Keeping it longer? The cost of car ownership calculator adds fuel, insurance and repairs, and the car loan calculator prices the loan by state.
Before deciding whether to lease or buy your next car, get the money factor, residual, mileage terms and fees in writing, plus a preapproved loan rate. Rebuild the payment with the five steps above, then run both through the car lease vs buy calculator. If the gap is smaller than the turn-in fee, the right decision for your needs is whichever matches how long you will drive it.
Lease or Buy Questions
Is leasing cheaper than buying?
Usually not at the same rate. On a $32,000 sedan at 7.0 percent, leasing costs $1,009 more over 36 months. The math favors leasing only when the manufacturer cuts the money factor or sets a high residual.
What is the lease payment on a $30,000 car?
About $459 a month with tax over 36 months at 0.00292 (7.0 percent), a 60.5 percent residual, $2,000 down and average tax. With nothing down it is about $524, plus $964 at signing.
What are three disadvantages of leasing a car?
Mileage overage charges, wear and tear charges at turn-in, and payments that never end if you lease one vehicle after another. Ending a lease early adds a fourth, the early termination charge set in the contract.
How do I convert a money factor to an APR?
Multiply by 2,400. A money factor of 0.00250 is 6.0 percent APR; 0.00150 is 3.6 percent. Divide an APR by 2,400 to go back.
Is insurance higher on a leased car?
Often. The leasing company owns the car, so a lease may require collision and comprehensive coverage, frequently with liability limits above your state minimum. A financed buyer’s lender sets similar rules until the loan is paid; the full coverage insurance cost guide shows what that adds.
Should I buy my leased car at the end?
Yes, if the residual is below its market value when the lease ends and it has been reliable. If the market value is lower, return the vehicle and let the leasing company absorb the difference.
Who should not lease a car?
Anyone who drives over 15,000 miles a year, keeps vehicles for many years, is hard on interiors or may need to exit early.
Estimates only, not a quote, an offer of credit or a lease offer. Figures use 2026 planning rates, statewide tax, typical fees and depreciation curves by vehicle type; your contract’s residual, money factor and the market at the end will move the real numbers. Last reviewed: October 2026.