Question 1

Is it better to buy or lease a car in 2026?

Accepted Answer

It depends on your driving habits and financial goals. In 2026, average monthly lease payments run about $613 versus $767 for financed purchases, making leasing the lower monthly-cost option. However, buying builds equity — you own an asset at the end of the loan. If you drive more than 15,000 miles per year, plan to keep the car long-term, or want to avoid perpetual payments, buying typically wins over a full ownership horizon. Use this calculator to compare the true net cost of each option for your specific numbers.

Question 2

What is a money factor in a car lease?

Accepted Answer

The money factor is the interest rate expressed in lease terminology. To convert it to an approximate annual percentage rate (APR), multiply the money factor by 2,400. For example, a money factor of 0.00125 equals roughly 3.0% APR. The calculator displays this conversion automatically beneath the money factor input field.

Question 3

What is the true cost of leasing versus buying a car?

Accepted Answer

The true cost of buying is your total out-of-pocket spending (down payment plus all loan payments) minus the equity you have built (vehicle market value minus remaining loan balance). The true cost of leasing is everything you pay — monthly payments, acquisition fee, disposition fee, and any cap reduction — since you return the car with no equity. This calculator computes both figures and compares them over the same time period so you can see which option actually costs less.

Question 4

Does leasing a car build equity?

Accepted Answer

No. When you lease, your payments cover the vehicle's depreciation during the lease term plus a finance charge. At the end of the lease you return the car and receive nothing. Buying, by contrast, builds equity as you pay down the loan and the gap between vehicle value and remaining balance grows. This equity difference is a central factor in why buying often wins over longer time horizons, even when leasing has lower monthly payments.

Question 5

What is the break-even point when comparing buying vs. leasing?

Accepted Answer

The break-even point is the month at which the cumulative net cost of buying drops below the cumulative cost of leasing. Before that point, leasing has cost less in total. After it, buying is cheaper because equity accumulation offsets the higher monthly payments. This calculator identifies the break-even month automatically and marks it on the cumulative cost chart with an orange marker.

Question 6

How do mileage limits affect the lease vs. buy comparison?

Accepted Answer

Leases typically cap annual mileage at 10,000 to 15,000 miles, with overage fees of $0.15 to $0.30 per mile. This calculator does not include mileage penalty costs, so if you drive above the lease cap, the true cost of leasing will be higher than shown. High-mileage drivers should add estimated overage charges to the lease cost manually, or simply factor in that buying is almost always the better financial choice when you drive significantly more than 15,000 miles per year.

Question 7

What is opportunity cost in the context of buying a car?

Accepted Answer

Opportunity cost represents what you could have earned if the money tied up in buying — primarily your down payment and the equity you are building — had been invested instead. The Full Analysis tab lets you enter an opportunity cost rate (for example, 5% if you would otherwise put the money in a high-yield savings account, or 7% for a stock market index fund). The calculator adds this estimated foregone return to the net cost of buying, giving you a more complete economic comparison.

Question 8

How does the buy vs. lease calculator account for depreciation?

Accepted Answer

For the buy side, the calculator uses a declining-balance depreciation model based on an annual depreciation rate you enter. Most new cars depreciate roughly 15% per year on average, though luxury models can lose 18–25% annually and popular trucks or SUVs may hold value better at 10–13%. For the lease side, depreciation is implicitly embedded in the money factor and residual value you enter from the dealer's lease sheet — those terms already reflect the manufacturer's expected depreciation over the lease term.

Mo.	Buy Pmt	Buy Net Cost	Buy Equity	Lease Pmt	Lease Cost	Difference
1	$635	$3,097	$2,538	$437	$2,437	-$660
2	$635	$3,734	$2,535	$437	$2,873	-$861
3	$635	$4,363	$2,541	$437	$3,310	-$1,053
4	$635	$4,984	$2,556	$437	$3,747	-$1,237
5	$635	$5,595	$2,579	$437	$4,183	-$1,412
6	$635	$6,199	$2,611	$437	$4,620	-$1,579
7	$635	$6,793	$2,651	$437	$5,056	-$1,737
8	$635	$7,380	$2,700	$437	$5,493	-$1,887
9	$635	$7,958	$2,757	$437	$5,930	-$2,028
10	$635	$8,527	$2,822	$437	$6,366	-$2,161
11	$635	$9,089	$2,895	$437	$6,803	-$2,286
12	$635	$9,642	$2,977	$437	$7,240	-$2,402
13	$635	$10,187	$3,067	$437	$7,676	-$2,511
14	$635	$10,725	$3,164	$437	$8,113	-$2,612
15	$635	$11,254	$3,270	$437	$8,550	-$2,704
16	$635	$11,775	$3,384	$437	$8,986	-$2,789
17	$635	$12,288	$3,505	$437	$9,423	-$2,866
18	$635	$12,794	$3,635	$437	$9,859	-$2,935
19	$635	$13,292	$3,772	$437	$10,296	-$2,996
20	$635	$13,782	$3,916	$437	$10,733	-$3,049
21	$635	$14,264	$4,069	$437	$11,169	-$3,095
22	$635	$14,739	$4,229	$437	$11,606	-$3,133
23	$635	$15,207	$4,397	$437	$12,043	-$3,164
24	$635	$15,667	$4,572	$437	$12,479	-$3,187
25	$635	$16,119	$4,754	$437	$12,916	-$3,203
26	$635	$16,564	$4,944	$437	$13,352	-$3,211
27	$635	$17,001	$5,141	$437	$13,789	-$3,212
28	$635	$17,432	$5,346	$437	$14,226	-$3,206
29	$635	$17,855	$5,558	$437	$14,662	-$3,192
30	$635	$18,271	$5,777	$437	$15,099	-$3,172
31	$635	$18,679	$6,003	$437	$15,536	-$3,144
32	$635	$19,081	$6,237	$437	$15,972	-$3,108
33	$635	$19,475	$6,477	$437	$16,409	-$3,066
34	$635	$19,862	$6,725	$437	$16,846	-$3,017
35	$635	$20,243	$6,980	$437	$17,282	-$2,960
36	$635	$20,616	$7,241	$437	$18,069	-$2,547

Is It Cheaper to Buy or Lease a Car?

Buy (Finance)

Lease Quote

Cumulative Net Cost Comparison

Buy (Finance)

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Lease Summary

Cumulative Cost Over Time

Month-by-Month Breakdown

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