Car Lease vs Buy Calculator Formula
Understand the math behind the car lease vs buy calculator. Each variable explained with a worked example.
Formulas Used
Total Lease Cost
lease_total = lease_monthly * term_monthsBuy Cost (minus equity)
buy_total_minus_equity = loan_monthly * term_months - car_price * residual_pct / 100Equity After Buying
equity_at_end = car_price * residual_pct / 100Variables
| Variable | Description | Default |
|---|---|---|
car_price | Vehicle Price(USD) | 35000 |
lease_monthly | Monthly Lease Payment(USD) | 350 |
loan_monthly | Monthly Loan Payment(USD) | 600 |
term_months | Term Length(months) | 36 |
residual_pct | Residual Value After Term(%) | 55 |
How It Works
Leasing vs Buying a Car
Leasing has lower monthly payments but builds no equity. Buying costs more monthly but you own an asset at the end.
Comparison
Total Lease Cost = Monthly Payment x Term Months (you own nothing at the end)
Net Buy Cost = Total Payments - Residual Value (you keep the car)
The true comparison is total lease outflow vs (total loan payments minus the car's remaining value). If the car retains value well, buying usually wins long-term.
Worked Example
$35,000 car, $350/mo lease vs $600/mo loan, 36-month term, 55% residual.
car_price = 35000lease_monthly = 350loan_monthly = 600term_months = 36residual_pct = 55
- 01Total lease = $350 x 36 = $12,600 (nothing to show for it)
- 02Total loan payments = $600 x 36 = $21,600
- 03Car value at end = $35,000 x 55% = $19,250
- 04Net buy cost = $21,600 - $19,250 = $2,350
- 05Buying costs $10,250 less when accounting for equity
Ready to run the numbers?
Open Car Lease vs Buy Calculator