What is a money factor?

The money factor is a lease-specific interest rate. Multiply it by 2400 to convert to an approximate APR.

What is residual value?

Residual value is the estimated worth of the leased item at the end of the lease term. A higher residual lowers your monthly payment.

Does this include taxes or fees?

No. This calculator focuses on the core financial comparison. Add taxes, registration, or acquisition fees manually.

Which is usually cheaper — loan or lease?

Leasing typically has lower monthly payments but you own nothing at the end. Buying costs more per month but builds equity.

Loan vs. Lease Calculator

이 도구에 대해

Enter your loan and lease parameters side-by-side and instantly see which option costs less over the full term. The calculator compares total out-of-pocket cost, effective monthly payment, and shows a break-even point when the two options have equal cost. Covers down payments, interest rate (APR), money factor, residual value, and term length.

사용 방법

1 Enter your loan details: vehicle price, down payment, annual interest rate, and term in months.
2 Enter your lease details: monthly payment, down payment, lease term, residual value, and money factor.
3 Click Calculate to see the full comparison table.
4 Review total costs, monthly payments, and the break-even analysis to decide which option fits your budget.

Why a monthly payment is the wrong way to compare

Lease ads almost always quote a lower monthly payment than a loan, and that single number convinces a lot of people to lease. But a lower payment does not mean a lower cost. A lease and a loan structure the same purchase in fundamentally different ways: with a loan you pay down the entire price of the vehicle and own an asset at the end, while a lease only pays for the portion of value you use up during the term. This calculator strips away the marketing and puts both options on the same footing — total out-of-pocket cost and, crucially, net cost after accounting for what you still own. All math runs locally in your browser.

How the loan side is calculated

The loan payment uses the standard amortization formula. First the down payment is subtracted from the price to get the financed principal P. The annual rate is converted to a monthly rate r (divided by 12 and by 100), and the term n is in months. The monthly payment is:

payment = P × r × (1 + r)^n / ((1 + r)^n − 1)

Total of payments is payment × n, and total interest is that figure minus the principal. The loan's total out-of-pocket cost adds the down payment back in. Then comes the part most comparisons skip: because you own the vehicle at the end, the calculator subtracts an estimated resale (residual) value to produce a net cost. That residual is what makes a loan competitive even when its monthly payment is higher.

How the lease side is calculated

Leases use different vocabulary. Instead of an interest rate they quote a money factor — a small decimal like 0.00125. The lease total payments are simply the monthly payment times the lease term, plus the cap-cost reduction (lease down payment). The tool also estimates the finance charge embedded in the lease using:

finance charge = money factor × (price + residual) × term

A handy fact worth memorizing: money factor × 2,400 ≈ the equivalent APR. A money factor of 0.00125 is roughly a 3% interest rate. If a dealer quotes a money factor that converts to a rate far above current loan rates, the lease is more expensive than it looks.

A worked example

Take the tool's defaults: a $30,000 vehicle, $3,000 down, 6% APR over 60 months, versus a lease at $350/month for 36 months with $2,000 down, an $18,000 residual, and a 0.00125 money factor.

Loan: Financed principal is $27,000. At a 0.5% monthly rate over 60 months the payment is about $522. Total of payments ≈ $31,320, total interest ≈ $4,320, and out-of-pocket (with the down payment) ≈ $34,320. Subtract the $18,000 the car is still worth and the net cost is roughly $16,320.
Lease: 36 × $350 = $12,600 in payments, plus $2,000 down = $14,600 out of pocket — and you own nothing.

Notice the trap: the lease costs less out of pocket ($14,600 vs $34,320), which is why its monthly payment looks attractive. But once you credit the loan buyer for the $18,000 asset they keep, the net cost gap narrows dramatically. The tool's recommendation engine compares the loan's net cost against the lease total and tells you which actually wins for your numbers.

When each option genuinely makes sense

Lease if you want the lowest cash outlay, you replace vehicles every two to three years, you drive predictable low mileage, or you can write off lease payments as a business expense.
Buy with a loan if you keep vehicles for many years, you drive high mileage (leases charge painful per-mile overage fees), you want to build equity, or you plan to sell or trade later and capture the resale value.

Common mistakes this comparison helps you avoid

Comparing only monthly payments. The headline lease payment ignores that you return the car with nothing to show. Always compare net cost.
Forgetting the residual. A loan that looks expensive on paper often wins once the car's leftover value is counted. The "Asset Value at End" row makes this explicit.
Ignoring mileage and wear charges. This tool models the financial structure, not lease penalties. If you exceed the mileage cap or return a scuffed car, real lease cost rises — add those fees mentally before deciding.
Treating the money factor as tiny. Multiply it by 2,400 to see the real interest rate before assuming a lease is "cheap financing."