Lease vs buy: which costs less?

Compare the two over the same number of months: the lease, or buying with a loan and selling the car at the end of that period.

Currency

Lease

The car

MSRP (list price)

The sticker price; the residual is based on it.

Selling price

The negotiated price, also called the cap cost.

Dealer add-ons in the price

Paint protection, nitrogen, etching.

Rebates and incentives

Lease terms

Length

months

Residual

% of MSRP

Money factor

For example 0.00210. Multiply by 2400 for an APR.

Acquisition fee

Acquisition fee is

Disposition fee at the end

Money down, fees and tax

Cash down

Trade-in equity

Documentation fee

Registration and government fees

Sales tax

Tax is charged

Buy

Loan interest rate

% APR

Loan length

months

Down payment

Buying fees

Registration, documentation.

What it sells for at the end of the lease term

Often close to the lease residual.

Over 36 months, buying costs less by $185.

Lease: total cost$22,160$584 a month

Buy: net cost$21,974$744 a month

Still owed on the loan$16,697After 36 months

How the comparison works

The lease cost is everything you pay: the amount due at signing, every payment and the fee when you hand the car back. The cost of buying is your down payment and loan payments over the same months, plus what is still owed on the loan, minus what the car sells for.

What the numbers leave out

Keeping the car longer usually favours buying: the steepest drop in value happens in the first years.
Driving more than the lease allows costs extra per mile or kilometre at the end of a lease.
Wear and tear charges when you return a leased car, and repairs once a bought car is out of warranty.