EVMath.

EV Lease vs Buy: Which Actually Costs Less?

Same car, same miles, two ways to pay for it. Compare the monthly payment and the true 3-year cost of leasing against financing — and see the resale value buying has to beat.

Lease term

Cheaper over 36 months (36,000 miles)

Leasing — by $1,723

Leasing costs $25,993 and you own nothing at the end. Buying costs $27,716 after cashing out the $3,811 of equity left in the car.

Lease36 months
$627.72/mo
$462.36 depreciation + $165.36 rent charge
$3,628 due at signing · $25,993 total
Buy (finance)60-month loan
$792.43/mo
$40,500 financed at 6.5% APR
$3,000 down · $27,716 net cost

The loan payment is $165/mo higher than the lease payment. A lease payment covers depreciation and interest only; a loan payment also buys down the balance on an asset you keep — so the monthly figures are not comparable on their own.

Where the answer flips

  • Buying breaks even with leasing if the car is worth $23,323 at 36 months — 52% of MSRP. You've assumed $21,600 (48%), so buying falls short by $1,723 of resale value.
  • The lessor set this car's residual at $24,750 (55% of MSRP), which is above the break-even. They are forecasting the car holds value better than buying requires — and they, not you, absorb the loss if it doesn't.
  • Leasing stops being cheaper past roughly 14,300 miles/year, where overage charges at $0.25/mile erase its advantage. Counting the fee only — extra miles also depress what a bought car resells for, so the real crossover sits a little higher.

Lease terms

Loan terms

Interest paid in 36 months
$5,816
Loan balance at 36 months
$17,789
Car's value at 36 months
$21,600

Lease cost over 36 months

Cash down at signing$3,000
36 payments of $627.72$22,598
Disposition fee$395
Excess mileage$0
Value retained$0
Total$25,993

Buy cost over 36 months

Down payment$3,000
36 payments of $792.43$28,527
Equity at the end$21,600 resale − $17,789 still owed($3,811)
Net cost$27,716

Equity is shown in parentheses because it comes back to you when you sell or trade in. Every other line is money out.

Sales tax is excluded on both sides. Most states tax each lease payment but tax a purchase on the full price at signing, which tilts the comparison further toward leasing — check your state before treating the totals as final. Fuel, insurance, and maintenance are excluded because they are the same car driven the same miles either way.

The comparison is about one number, and it isn't the monthly payment

A lease payment is almost always lower than a loan payment on the same car, and it tells you almost nothing. The lease payment covers the depreciation the lessor expects over the term, plus interest. The loan payment covers all of the depreciation, plus interest, plus the part of the car you still own afterward. Comparing the two directly is comparing rent to a mortgage.

What actually decides it is the residual value— the number the lessor writes into the contract for what the car will be worth at turn-in. That number is a forecast, and it is binding on them and not on you. If the car is worth less than the residual in three years, you walk away and the lessor absorbs the difference. If it's worth more, you could have bought it, sold it, and kept the surplus. Leasing versus buying is a bet on that one forecast, and everything else is arithmetic.

Why this question is sharper for EVs than for gas cars

Electric vehicles have depreciated faster than comparable combustion cars in recent years, driven by rapid improvements in range and charging speed, falling new-EV prices that drag used values down with them, and used buyers' uncertainty about battery health. A three-year-old EV competes against a new one that is cheaper, goes farther, and charges quicker than it did when new.

That is precisely the risk a lease hands to someone else. It is also why lessors have grown careful with EV residuals — and why the calculator asks you for the lessor's residual and your own resale estimate as two separate inputs. They are two different claims about the same future. When the residual on the worksheet sits above the break-even resale value, the lease is priced off a rosier forecast than buying needs in order to pay off, and the lessor is the one carrying that optimism.

The credit that used to settle this

Through September 30, 2025, leasing an EV came with a structural advantage that had nothing to do with depreciation. Under §45W, the commercial clean vehicle credit, a leasing company could claim $7,500 on nearly any EV and pass it through as a capitalized cost reduction — skipping the income caps, MSRP limits, and battery-sourcing tests that a buyer claiming §30D had to satisfy. Cars that qualified for nothing on a purchase qualified for the full amount on a lease.

The One Big Beautiful Bill, signed July 4, 2025, terminated §30D, §25E, and §45W for vehicles acquired after September 30, 2025. That advantage is gone, on both sides, which is why both incentive fields above default to $0. Manufacturer lease cash and state rebates remain, vary by model and month, and belong in the calculation — the EV Tax Credit Calculator covers what is actually left.

The inputs people get wrong

The negotiated price on a lease. Lease payments are quoted as though they were a menu price, and a startling number of people never negotiate the capitalized cost. Every dollar off the sticker comes off the amount you finance while the residual — a percentage of MSRP — stays fixed, so discounts flow straight through to the payment.

The money factor. Multiply it by 2,400 to see the APR. A money factor of 0.00250 is 6%. It is quoted as a decimal small enough to look like a rounding error, it is marked up like any other dealer-arranged financing, and it is negotiable.

Cash down on a lease. It lowers the payment and buys no equity. If the car is totaled in month four, the insurance settles with the lessor and your down payment is gone. Set it to $0 above and watch the total barely move — that is the whole argument.

The loan term. A 72-month loan makes buying look affordable month to month while guaranteeing you are underwater for years. Set the loan term long enough above and the equity line turns negative: at the three-year mark you would owe more than the car is worth, and buying loses on a comparison it would otherwise win.

Starting values are round, editable placeholders for a mid-market EV deal — not published averages, and not a quote. Residuals, money factors, and lease cash are set per model and per month by each brand's captive lender; take them from the actual lease worksheet. Check projected resale values against Kelley Blue Book or Edmunds for the specific model, and verify incentives with the IRS and your state program before relying on them.

Frequently asked questions

Should I lease or buy an EV?+

It comes down to one number: what the car is worth when the lease would have ended. Leasing is cheaper whenever the car depreciates faster than the lessor assumed, because the residual value on the contract is fixed at signing and they eat the shortfall. Buying is cheaper whenever the car holds its value better than that, because the equity is yours. The calculator prints the exact resale value at which the two paths cost the same — if you think the car will beat it, buy; if you don't, lease. Beyond the math, leasing wins if you want a new car every three years or expect battery and charging technology to keep improving quickly, and buying wins if you plan to keep the car well past the loan, since the cheapest years of any car's life are the ones with no payment on it.

Is leasing an EV cheaper than buying one?+

Often over a 3-year window, and for a specific reason: EVs have depreciated faster than comparable gas cars, and a lease transfers that risk to the lessor. You pay for the depreciation the contract predicted, not the depreciation that actually happened. But the window matters enormously. A lease never stops costing money — you hand the car back and start over. A purchase eventually does, and every year you keep a paid-off car pushes the total cost of ownership down. Compare the same car both ways over your real holding period, not the 36 months the dealer wants to talk about.

What is a money factor and how do I convert it to an APR?+

The money factor is the interest rate on a lease, written as a small decimal like 0.00250. Multiply it by 2,400 to get the equivalent APR — 0.00250 becomes 6%. Dealers quote it in this format partly out of convention and partly because 0.00250 sounds like nothing while 6% invites a comparison to your bank's auto loan rate. Always convert it. The money factor is negotiable in the same way an APR is, it depends on your credit tier, and a marked-up money factor is one of the least visible ways a lease deal gets more expensive.

Does the federal tax credit still make leasing an EV cheaper?+

No. Until September 30, 2025, the §45W commercial clean vehicle credit let a leasing company claim $7,500 on nearly any EV and pass some or all of it through as a capitalized cost reduction — with none of the income limits, MSRP caps, or battery-sourcing rules that applied to buyers claiming §30D. That gap was the single biggest reason to lease rather than buy, and it is gone. The One Big Beautiful Bill, signed July 4, 2025, terminated §30D, §25E, and §45W for vehicles acquired after that date. Both incentive fields in the calculator default to $0 for exactly this reason. Manufacturer lease cash and state rebates still exist and still belong in the calculation — enter whatever your deal actually includes.

Why does the calculator ask for MSRP and the negotiated price separately?+

Because the residual value is calculated as a percentage of MSRP, not of the price you negotiate. Every dollar you talk off the sticker comes straight off the amount you finance while the residual stays put, so it reduces your monthly payment by roughly that dollar amount spread across the term. This is the part of lease pricing that dealers are least eager to volunteer: many buyers assume a lease payment is a fixed menu price and never negotiate the capitalized cost at all. It is negotiable exactly like a purchase price.

Should I put money down on an EV lease?+

Usually no, and it is one of the few places where the conventional advice is nearly unanimous. A cap cost reduction lowers your monthly payment but buys you no equity, because you never own the car. If it is stolen or totaled in month four, the insurance payout goes to the lessor and your down payment is gone — gap coverage protects the lender's balance, not your cash. Setting the cash-down field to $0 raises the monthly payment and leaves the total cost nearly unchanged, which is precisely the point: on a lease, a down payment is a prepayment, not an investment.

What does the mileage allowance actually cost me?+

Whatever you drive past it, at the per-mile rate on the contract — typically $0.20 to $0.30 — billed at turn-in. The calculator adds this to the lease total and reports the annual mileage at which those charges erase the lease's advantage. Two things to keep in mind. Driving under the allowance earns you nothing back, so buying a bigger allowance you don't use is a pure loss. And a higher allowance lowers the residual on the worksheet, which raises the monthly payment. If you regularly drive more than about 15,000 miles a year, the lease structure is working against you and buying deserves a hard look.

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