Lease vs buy calculator.Three holds. One honest answer.

Because most of them compare monthly payment, not total cost of ownership over a fixed hold period. A 36-month lease at $499/mo always looks cheaper than a 72-month finance at $675/mo if you stop the math at the monthly. But the lease has a 37th month, and a 38th — you either sign another lease (and pay another cap reduction, another acquisition fee) or walk away with nothing. The buy side at month 37 has a paid-down loan and a car worth ~60% of what you paid for it. This calculator runs the full math at 3, 5, and 7-year hold periods so the comparison is apples-to-apples.

A 36-month lease ends at month 36. If your hold period is longer, you'll need another car. By default we assume you sign an identical lease for the next cycle (same captive, so the disposition fee is waived; new cap cost reduction is paid upfront, new acquisition fee is rolled into the cap cost). You can uncheck 'roll into a new lease with the same captive' if you'd switch lenders each cycle — that adds the disposition fee at every boundary. The lease cost line on the chart shows visible vertical steps at each cycle boundary so you can see the restart cost in real time.

When you finance a car and hold it for 5 years, you've spent cash (down payment + monthly payments) but you also own an asset — the car, depreciated to ~55% of its original value. To compare fairly against a lease (which has nothing to sell at the end), we subtract the depreciated car value from the buy side's cash-out. That's the 'net cost' — what the car actually cost you to own, after you sell it. The depreciation curve is the industry standard: 15% in year 1, 15% in year 2, 12% in year 3, 10%/yr after. Your specific make / model / mileage may depreciate faster (Mercedes, BMW, EVs) or slower (Toyota, Honda, Lexus).

Three structural cases. First, on luxury brands with subsidized money factors and inflated residuals (BMW, Mercedes, Audi often run promotional lease programs with MFs below market rate and residuals above what the car actually retains), the math can favor leasing for 36 months even at a 5-year hold. Second, if you genuinely replace your car every 3 years anyway, the lease replacement cycle isn't a penalty — it's your stated preference, and you avoid the transaction cost of selling. Third, business use cases where the lease payment is deductible against pass-through income at a higher rate than depreciation on a purchased vehicle. Outside those three cases — at current 7% loan APRs and market money factors — buying and holding 5+ years is meaningfully cheaper.

The captive lender (e.g. BMW Financial Services) publishes a base money factor every month. When they want to move a particular model, they'll drop that base MF below what the bond market would imply — sometimes to 0.00001 (essentially 0% APR on the lease). That's a subsidized MF. You'll know if you have one by comparing your quoted MF against the published base. The car-lease-calculator tool does this comparison automatically. If your money factor's APR equivalent is below the new-car loan APR for the same credit tier, you've got a subsidized lease — that's when the math can favor leasing.

Generally no. A cap cost reduction (lease 'down payment') is gone if the car is totaled or stolen — insurance pays the lender the depreciated value, GAP covers the deficiency, and your cash is gone. The math also doesn't favor it: every $1,000 of cap reduction lowers the monthly by ~$28 over 36 months, which is the same $1,000 just amortized — you're not getting a discount, you're prepaying. On a purchase, a down payment builds equity from day one and reduces the risk of going underwater. The asymmetry matters: down payment on a finance is risk management; cap cost reduction on a lease is risk concentration.

Insurance differences (lease typically requires higher liability limits and forces GAP coverage — adds ~$200–$600/yr), maintenance after the factory warranty expires on a purchase (years 4+ on most brands), the opportunity cost of capital tied up in a down payment, registration / property tax in states that assess on the financed amount vs. the lease payment, and — most importantly — the contract terms themselves. Doc fees, dealer add-ons (paint protection, VSC, GAP markup), mandatory arbitration clauses, force-placed insurance language, wear-and-tear charge schedules on the lease. The calculator can't see any of that. The Redline app reads the actual contract.