How to use a Lease vs Buy Calculator

When you use a Lease vs Buy Calculator such as the one at, you should understand how it works and how to get the results you want.

Car leasing is a little different than buying a car with a loan. The language is different, the process is different, and the way that payments are calculated is different. Let’s take a look at how you would use an online lease vs buy calculator to better understand the differences.

What you need in order to use a Lease vs Buy Calculator

For the lease side of the calculator, you’ll need to know the MSRP (sticker price) of the car, the negotiated price of the car (yes, you negotiate prices when leasing, just as if you were buying), the lease money factor (a form of interest rate), the number of months (lease term) you want to lease, the lease-end residual value (estimated lease-end resale value), and the sales tax rate where you live.

You’ll be asked to provide those figures when you use the calculator. If you don’t know some of the figures, you can guess. However, for best results, you should have the exact figures, most of which you can get from the dealer with whom you are working on a lease deal.

For the loan side of the calculator, it’s a little more simple. You need the negotiated selling price for your car, the loan interest rate (APR), the number of loan months (term), the amount of any down payment, and the sales tax rate where you live. You’ll be asked to input¬†these figures at the appropriate time as you use the calculator.¬†Again, if you don’t know the exact figures, or want to play around with different figures, you can guess or estimate.

Understanding the Results

The results of the Lease vs Buy Calculator will show you a comparison of monthly payments, financing costs, and total costs, including taxes.

Generally you’ll notice that leasing provides lower payments than buying with a loan. You also notice that total costs are lower, even though financing costs are higher for leasing. That’s because, with lower payments, you don’t pay down the original cost as fast with leasing. Because the average outstanding balance is higher with leasing, finance charges are higher.

Also notice that total sales tax is less with leasing. That’s because, in most states, you only pay sales tax on the monthly payment amount rather than the entire value of the vehicle, as you do when you buy.

Lease vs Buy Calculator


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