Compare the true total cost of leasing versus buying the same car over the same term, including resale value.
45-60% typical for 36-month leases
x 2400 = approx APR (0.00125 = ~3%)
New cars average 15-20%/yr. Used to estimate resale value.
The calculator models total out-of-pocket cost for both options over the same term. For leasing, it uses the standard money factor formula: monthly payment = (cap cost minus residual / term) + (cap cost plus residual times money factor), then applies sales tax. For buying, standard loan amortization. The buy scenario subtracts estimated resale value at term end to produce a net cost - making it a true apples-to-apples comparison with the lease where you have no residual equity.
Leasing costs less on paper when the residual value is set high by the manufacturer, when you drive under the mileage limit, when you prefer a new car every 3 years, or when a manufacturer-subsidized money factor is below market rates. Leasing also makes sense for business use when payments can be fully deducted as a business expense.
Buying wins when you plan to keep the car past the loan payoff - a paid-off car costs nothing per month. Buying also wins for high-mileage drivers (excess mileage fees at $0.15-$0.25/mile add up fast), those who want to modify their vehicle, or anyone who wants the flexibility to sell at any time. Over a 10-year horizon, buying and holding almost always wins on a pure cost basis versus cycling through leases every 3 years.