Car Lease vs. Buy Analyzer
Which option costs less over the time you plan to drive the car? The residual value and money factor are the two most negotiable and most opaque lease variables.
Lease Terms
$
$
% of MSRP
Money factor 0.00125 = 3.00% APR equivalent
$
$
%
$
If Buying
%
$
% of MSRP
$
Monthly Lease Payment (after tax)
$498
base: $461 before tax
Monthly Buy Payment
$685
60-month loan at 6.5%
Total Lease Cost
$20,339
over 3 years. Nothing owned at end.
Total Buy Net Cost (after residual)
$37,089
after $12,000 resale value
Your money factor of 0.00125 is equivalent to a 3.00% APR. Dealers don't volunteer this. Always ask for the money factor and verify it independently.
Lease vs. Buy Side-by-Side
Lease
Monthly payment (after tax)
$498
Down payment
$2,000
Depreciation per month
$389
Finance charge per month
$73
Excess miles charge
$0
Disposition fee
$400
Total outlay
$20,339
What you own at end
Nothing. You return the car.
Buy
Monthly payment
$685
Down payment
$5,000
Principal paid
$35,000
Interest paid
$6,089
Maintenance premium
$3,000
Resale value
-$12,000
Net cost
$37,089
What you own at end
Vehicle (30% of MSRP = $12,000)
Cost Per Year Comparison
| Metric | Lease | Buy |
|---|---|---|
| Analysis period | 3 years | 5 years |
| Total cost | $20,339 | $37,089 |
| Cost per year | $6,780 | $7,418 |
| Residual value (MSRP) | $22,000 (55%) | $12,000 (30%) |
| Cap cost vs MSRP | -$2,000 negotiated savings | |