Lease vs Buy Break-Even Calculator

For leasing, it estimates the monthly lease payment using the money factor (APR ÷ 2400 when needed), then adds depreciation and finance components, plus taxes, upfront lease fees, and your down payment/cap cost reduction. For buying, it models the financed amount (price + taxes/fees − down payment) and estimates monthly loan payments using the APR, then totals those payments across your ownership horizon. Finally, it tracks cumulative totals month by month to identify the break-even month.

Leases often look best over shorter horizons when the residual cushions depreciation, while buying can win over longer horizons as the loan amortizes. Taxes can materially change the outcome because they scale with the payment structure (lease payments vs loan payments). Also, if your ownership horizon is shorter than the lease term, the comparison assumes you exit at that horizon—real-world early termination and disposition costs can change the break-even.

If residual is entered as a percent, it must be between 0% and 100% (and cannot exceed the purchase price when converted). For 0% APR / 0.0000 money factor, finance charges become zero, so totals depend mostly on depreciation and fees. If the ownership horizon is very short (e.g., 1–6 months), the tool may show one option as cheaper largely due to upfront amounts—so interpret break-even with caution.

This estimate typically excludes insurance, maintenance, fuel, mileage overages, wear-and-tear, and early termination penalties unless you add them as fees. It also ignores manufacturer incentives, tax credits, and regional tax effects unless you reflect them in the inputs (for example, by adjusting fees/price). If you plan to trade in or refinance, the true break-even could differ from the calculator’s assumption of no renegotiation.