How to Use the Car Lease vs Loan Monthly Calculator
Choosing between leasing and financing a car is one of the most important decisions in car ownership. This calculator computes your estimated monthly lease payment alongside a standard loan payment so you can compare the two options side by side with your actual numbers.
How Lease Payments Are Calculated
A lease payment has two components: the depreciation fee and the finance fee. The depreciation fee covers the portion of value you use during the lease, divided over the term. The finance fee is calculated using the money factor (APR รท 2,400) applied to the net capitalized cost plus residual value. Together they give your monthly payment.
Lease vs Loan: Key Trade-offs
Leasing almost always produces a lower monthly payment, but you don't own the car and face annual mileage limits (typically 10,000โ15,000 miles). Financing costs more per month but builds equity โ at the end of the loan, the car is yours. If you drive heavily or keep cars for 6+ years, buying is almost always the better financial choice long-term.
Frequently Asked Questions
Leasing typically has lower monthly payments because you only pay for the car's depreciation during the lease term โ not its full price. However, you build no equity and face mileage restrictions and wear-and-tear fees at lease end.
Residual value is the car's predicted worth at lease end, expressed as a percentage of MSRP. A higher residual means lower depreciation and lower monthly payments. Vehicles that hold value well โ like many SUVs and trucks โ tend to have more favorable lease terms.
Yes. Most leases include a purchase option at the pre-agreed residual price. If the car's market value exceeds the residual at lease end, buying it out can be a smart financial move.