How it works
This compares what each option really costs you over the length of the lease. Leasing cost is everything you pay: due at signing, the monthly payments and any end-of-lease charges.
Buying cost is your down payment plus the loan payments made in the same months, plus the loan balance still owed, minus what the car is worth at that point. In other words, it assumes you could sell the car and keep the equity.
Buying usually wins if you keep cars a long time, because the payments end while the car still has value. Leasing can make sense if you want a new car every few years, drive fewer miles than the lease allowance, or can deduct the lease for business.
Formula
Lease cost = due at signing + payment × months + end fees; buy cost = down + loan payments + remaining balance − car value
Questions people ask
Is it cheaper to lease or buy a car?
Over the long run, buying and keeping a car is usually cheaper. Over a single 3-year window, leasing can be close or cheaper, particularly when manufacturers subsidize lease deals.
What is the money factor on a lease?
It is the lease's interest rate in another form. Multiply the money factor by 2,400 to get an approximate APR; 0.0025 is roughly 6%.
What happens if I exceed lease mileage?
You pay a per-mile charge at turn-in, commonly $0.15–$0.30 per mile. Include an estimate in the end fees field.