Car loan vs lease vs cash calculator
A monthly payment does not tell you which path is cheapest, because it hides what you are left holding. This prices all three over one horizon you set, credits the resale value or lease equity back, and never drops a loan balance still owed or a lease that stops covering the horizon.
Worked example — Cheapest way to have a $38,000 car for 36 months: $20,496. financing with a loan, $303 cheaper than paying cash. 60-month loan at 6.9%, 36-month lease at a 0.00225 money factor.
Price your own car three ways
Set the price, the loan terms, the lease terms, and how long you would actually keep the car. Every number below, the chart, and the table all come from the same calculation, so nothing on this page can say something the tool above would disagree with.
Down payment, residual, fees and rates 6
A diamond marker on the lease line means the lease term has ended without a modelled buyout: the car has gone back and the number no longer represents owning a car for that whole horizon.
Should you lease, finance, or pay cash for a car?
On the default scenario, a $38,000 car held for 36 months is cheapest financing with a loan, at $20,496 net of the car's resale value or lease equity, $303 less than paying cash. There is no universal answer: which path wins changes with how long the car is kept, shown below and in the full table further down.
Net cost of cash, financing, and leasing over the same horizon
The same $38,000 car, the same 36-month horizon, three ways to pay for it. Net cost is what actually left your pocket over that time, minus the resale value or lease equity you are left holding.
| Path | Net cost | Monthly payment |
|---|---|---|
| Pay cash | $20,799 | Not applicable |
| Finance | $20,496 | $691 |
| Lease | $22,871 | $608 |
Financing still owes $15,458 at month 36 of its 60-month term, which is added back into the loan's cost rather than dropped: a "price minus resale value" shortcut that skips the balance still owed understates a loan that has not finished paying by exactly that amount.
What APR does a 0.00225 money factor mean?
Multiply the money factor by 2,400: 0.00225 x 2,400 = 5.40%, the equivalent simple APR a lease with that money factor is charging. It is the leasing industry's own conversion, not a derivation, and it lets a lease offer be compared against a loan's APR on the same footing before either payment is computed. A money factor of 0.00125 is 3%, and 0.00292 is about 7%.
Net cost by how long you keep the car
Same $38,000 car, same loan and lease terms, priced at seven different horizons. A horizon past the 36-month lease term with no buyout modelled is marked: the lease has stopped covering the car by then, so its number is not a fair comparison to a path that owns the car the whole time.
| Months kept | Cash | Finance | Lease | Cheapest |
|---|---|---|---|---|
| 12 | $7,644 | $8,079 | $8,290 | paying cash |
| 24 | $14,533 | $14,878 | $15,581 | paying cash |
| 36 | $20,799 | $20,496 | $22,871 | financing with a loan |
| 48 | $26,558 | $25,008 | $22,871 * | leasing |
| 60 | $31,907 | $28,473 | $22,871 * | leasing |
| 72 | $36,931 | $31,199 | $22,871 * | leasing |
| 84 | $41,703 | $33,556 | $22,871 * | leasing |
* the 36-month lease has ended and no buyout is modelled at this horizon: the car has gone back. Model a buyout in the calculator above to compare a bought-out lease against the full horizon instead.
Two more real cases
Keeping the loan's full term, and buying out the lease
Stretch the horizon to the loan's full 60 months instead of the 36-month lease, zero out the opportunity rate, and model paying the residual to keep the leased car rather than returning it. Cheapest is now paying cash, at $21,139. The loan is fully paid off by then, so its whole resale value counts as equity; the lease's buyout price is set against the same car's value at the same month, so the comparison is fair over the full horizon in both directions.
A cheaper car, cash against a 4.9% loan
A $24,000 car with no down payment, financed at 4.9% over 36 months and term-matched to the horizon so nothing is left owing. Financing wins here too, at $11,117 against $13,136 for cash: at a rate this low, keeping the cash invested at 5% outearns what the loan costs in interest.
What we think
Judge all three on the same horizon and the same car, never on the monthly payment alone. A low payment that comes from a longer loan term or a lease you return at the end can still be the expensive path once the resale value, the loan balance still owed, and the opportunity cost of cash tied up are put back in. The honest comparison needs one more number than most people bring to it: how long you actually plan to keep the car. Lease when that horizon is genuinely short and a warranty-covered payment matters more than ownership. Finance or pay cash when it is long, and let the interest rate on the loan versus what idle cash would earn decide between those two, not habit.
The next question after this one
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