Entry № 13 · logged Oct 1, 2026Free, no sign-upLease vs Buy · Car Finance
One number decides every lease: the break-even payment.
Forget the feature list, the warranty pitch, the “what monthly payment works for you” — the whole lease-vs-buy decision collapses into one number: the monthly lease payment at which the two paths cost exactly the same. Below it, the lease wins; above it, the buyer wins. On the seeded $35,000 car that number is $493.72 a month, and the slip below recomputes it live from whatever you type.
$493.72 a month — lease it below that line and the lease wins; above it, buy.
The dealer's desk slip, Form LVB-13. Left ledger: the lease offer, line by line. Right ledger: buying the same car with a loan, minus the equity you keep. Every keystroke re-posts the net-cost verdict below the tear line.
Net cost is what each path really costs you: the lease's drive-off plus every payment plus mileage overage, against the buyer's down payment plus loan payments minus the equity left in the car at the end. The comparison window is the lease term.
Around this tool
From the ledger
Where the $493.72 comes from
The buyer’s net cost is fixed by the loan: $3,500 down plus 36 payments of $616.33, minus $5,414 of net equity — $20,274. The lease has to beat that number. Subtract the $2,500 drive-off and divide what’s left by 36 months: ($20,274 − $2,500) / 36 = $493.72 a month. Every dollar the dealer quotes under that line is a dollar the lease wins by; every dollar over is a dollar the buyer wins by. It’s the entire negotiation in one number.
Mileage moves the line. Drive 15,000 miles a year against a 12,000 cap at $0.25 a mile and the $2,250 of overage comes straight off the lease’s budget — the break-even drops to $431.22 a month, because the lease now has to beat the buyer and pay its own overage. Be honest about your miles before you set your target; the slip recomputes the line the moment you change them.
How to use it at the desk: get the out-the-door lease quote (payment and drive-off — the line needs both), compare the payment to the break-even, and negotiate toward it. The dealer negotiates two levers that move the payment — the capitalized cost and the money factor — and you now know exactly how far each dollar of concession moves you. A $389 quote against a $493.72 line isn’t just “good”; it’s $3,770 of win on the payment alone — $4,271 once the lighter drive-off is counted.
Disclaimer: the figures here are arithmetic, not financial advice. Resale values are guesses, money factors are negotiable, and your credit decides your rate — the dealer’s worksheet has the final word.
Filed answers
Questions from the finance office
Is the break-even payment the same as a “fair” lease payment?
Close enough to use that way: it’s the payment at which the lease ties buying on true net cost, given your loan terms and the car’s expected resale. Under it, the lease is genuinely cheaper — not just lower-monthly. Over it, you’re paying a premium for the new-car-every-three-years habit, and you should know the size of it.
Why does the drive-off matter if I only care about the payment?
Because the break-even is computed from the total: (buyer’s net − drive-off − overage) / months. A $2,000 bigger drive-off lowers the break-even payment by $55.56 a month on a 36-month lease — the dealer can “hit your payment” by stuffing cash into the drive-off while the deal gets worse. Always quote payment <em>and</em> drive-off together.
Does a bigger down payment on the loan change the break-even?
Barely, and that’s the interesting part: more down shrinks the loan but the cash still left your pocket, so the buyer’s net cost barely moves — the equity just shifts from “payments” to “down.” On the seeded numbers, doubling the down payment to $7,000 moves the break-even payment by about $14. The levers that matter are the rate, the term, and the resale value.
What if I’d put the down payment in savings instead?
Then the honest comparison adds opportunity cost to the buyer’s side — a few hundred dollars at typical savings rates over three years, not enough to flip most verdicts, but real. This slip keeps it simple and excludes it; the method section says so. If your alternative is a high-return investment, mentally shade the break-even up a few dollars.
What exactly is “net cost” for the buyer?
Down payment plus loan payments made inside the comparison window, minus the equity left at the end — the car’s resale value minus the remaining loan balance. On the seeded example: $3,500 down plus $22,188 in payments, minus $5,414 of net equity, nets $20,274 against the lease’s $20,320. Every line is visible in the ledger above.
Is this financial advice?
No — it’s arithmetic on numbers you type. It doesn’t check your credit, negotiate your money factor, or know what your car will really be worth in three years. The dealer’s worksheet and your own budget have the final word.
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