Auto Loan vs Lease Payment Calculator

An auto loan vs lease payment calculator is a financial comparison tool that evaluates the total cost of buying a vehicle with an auto loan versus leasing the same vehicle. For buying, it accounts for the vehicle price, down payment, loan interest rate, loan term, trade-in value, and sales tax to calculate the monthly loan payment, total interest paid, total cost, and estimated equity at lease-end. For leasing, it considers the capitalized cost, residual value, money factor, lease term, mileage allowance, acquisition fee, and disposition fee to calculate the monthly lease payment, total lease cost, and potential mileage overage fees. The calculator then compares both options side by side and provides a recommendation based on total cost, with insights about equity, monthly cash flow, and end-of-term outcomes.

1. Enter Vehicle & Loan Purchase Details: In the blue "Buy" panel, enter the vehicle price, down payment, loan interest rate, loan term in months, trade-in value, and your local sales tax rate. The calculator computes the loan amount (price - down payment - trade-in + sales tax), the monthly payment using the standard amortization formula, total interest over the loan term, and estimated vehicle equity at the end of the lease comparison period based on a standard 15% annual depreciation rate.
2. Enter Lease Details: In the green "Lease" panel, enter the capitalized cost (negotiated vehicle price for the lease), residual value (estimated value at lease end), money factor (lease interest rate - multiply by 2,400 to get the APR equivalent), lease term in months, annual mileage allowance, acquisition fee (bank fee to initiate the lease), and disposition fee (fee if you don't purchase the vehicle at lease end). The calculator computes the monthly lease payment as depreciation fee + finance fee, and estimates mileage overage costs based on typical 15,000 miles/year driving.
3. Review the Side-by-Side Comparison: The calculator displays a comprehensive comparison including monthly payments, total costs, breakdown tables, visual bar charts, and a personalized recommendation based on total cost and equity. The recommendation considers whether buying builds equity while leasing offers lower upfront costs and monthly payments.

• Loan Amount & Amortization: The loan amount equals the vehicle price minus down payment and trade-in value, plus sales tax. The monthly payment is calculated using the standard amortization formula: P × (r(1+r)^n) / ((1+r)^n - 1), where P is the principal, r is the monthly interest rate, and n is the number of months. Total interest is the sum of all interest payments over the loan term.
• Equity at End: The estimated equity at the end of the lease comparison period is the difference between the vehicle's depreciated value and the remaining loan balance. The calculator uses a straight-line 15% annual depreciation rate to estimate the vehicle's value. Positive equity means you own more than you owe - a key advantage of buying over leasing.
• Lease Payment Calculation: The monthly lease payment consists of two components: the depreciation fee (capitalized cost minus residual value, divided by the lease term) and the finance fee (capitalized cost plus residual value, multiplied by the money factor). The money factor is the lease equivalent of an interest rate - multiply by 2,400 to convert to APR.
• Mileage Overage: If your expected annual driving exceeds the lease mileage allowance, you pay an overage fee (typically $0.15-$0.25 per excess mile) at lease end. The calculator estimates this cost assuming 15,000 miles/year of driving and $0.20/mile overage, helping you assess whether a higher mileage allowance or buying is more cost-effective.

Several factors influence whether buying or leasing is the better choice for your situation: