Entry № 13 · logged Oct 1, 2026Free, no sign-upLease vs Buy · Car Finance
Lease or buy? The dealer sells the payment — the ledger posts the net cost.
The monthly payment is a rigged comparison: the lease quote is rent, the loan quote builds equity, and the dealer knows you’ll only compare the two numbers on the windshield. This slip ignores the payment entirely and totals what each path really costs over the lease term — drive-off, every payment, mileage overage on one side; down payment, loan payments, minus the equity you keep on the other — then rubber-stamps the winner.
On a $35,000 car at the prefilled numbers, the two paths land $46 apart — a genuine coin flip. Move one assumption and the stamp flips.
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
How the ledger prices a lease against a loan
Net cost is what each path really costs you, full stop. The lease: $2,500 due at signing plus $495 a month for 36 months, which posts $20,320 with no miles over the cap. The buy: $3,500 down plus $616.33 a month for 36 of the loan’s 60 months — that’s $22,188 paid in — minus the equity left at the end: the car’s $19,250 resale (55% of the price, the genre-standard guess at 36 months) less the $13,836 still owed on the loan, which is $5,414 of net equity you keep. Net: $20,274. The buyer edges it by $46.
Now watch the monthly payments lie. The lease asks $495 a month; the loan asks $616.33. The lease wins the cash-flow game by $121 a month, every month — and still loses the net-cost game by $46 over three years. That’s the dealer’s whole trick: the payment feels like the price, but the payment is rent while the loan payment is part purchase. Compare payments and the lease always looks cheaper. Compare net cost and you see the equity.
The third line the slip posts is the one to take to the dealership: the break-even lease payment, $493.72 a month on these numbers. Offered the car at $389 with $1,999 due? The lease wins by $4,271 — subsidized deals with high residuals and low money factors are the one place leasing genuinely beats buying. Quoted $520? The buyer wins; walk. The break-even line turns the negotiation from vibes into a number.
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
Why is comparing monthly payments the wrong math?
Because the two payments aren’t the same kind of money. A lease payment is rent — at the end you hand the car back and own nothing. A loan payment buys equity: on the $35,000 example here, three years of $616.33 payments leaves a $13,836 balance against a $19,250 car, which is $5,414 of net equity you keep. The honest comparison is net cost: everything paid in, minus everything you walk away with. That’s what this slip posts.
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.
What is a money factor, and how do I read it?
The money factor is the lease’s interest rate wearing a costume. Multiply it by 2400 to get the APR: 0.00250 means about 6.00%. Dealers quote it this way because “0.00250” doesn’t invite comparison the way “6%” does. If the worksheet shows a factor above about 0.00375 — roughly 9% — you’re financing the lease at loan-shark rates.
How do mileage limits change the math?
They’re the lease’s hidden second price. Drive 15,000 miles a year against a 12,000 cap at $0.25 a mile and you owe $2,250 at turn-in — enough to flip the seeded verdict from a $46 coin flip to a $2,296 win for buying. Be honest about your real miles before you sign; the slip has a line for exactly that.
When does leasing actually win?
Three cases: subsidized manufacturer deals (high residual value plus a low money factor — the $389-a-month example below beats buying by $4,271), genuinely low mileage with an always-new-car habit, and fast-depreciating cars like many EVs where the lease’s guaranteed residual shields you from the technology risk. Outside those, the buyer usually banks the equity.
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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