Cash, finance, or lease? The monthly payment tells you almost nothing.
1. What does it really cost. Lease payments look cheapest but you own nothing at the end. Judge on total cost, not on the monthly figure — the calculator puts all three side by side.
2. What gets missed. Stretch the term and the payment halves while the interest multiplies 2.4x (our calculation). And the CFPB ties long terms to negative equity — owing more than the car is worth.
3. How to use it. Enter the negotiated price, your sales tax rate and an APR. Results exclude insurance, maintenance and fuel, and the APR varies a great deal with your credit score.
- Vehicle: $0
- Sales tax: $0
- Fees: $0
- No interest
- You own it
- Down: $0
- Loan: $0
- Interest: $0
- Term: 0 months
- You own it
- Down: $0
- Depreciation paid: $0
- Residual value: $0
- Buyout total: $0
- You return it
Estimates. Actual costs depend on your credit score, dealer fees, state taxes, and lease terms (money factor, mileage limits). Lease assumes a money factor equivalent to your APR. Excludes insurance, maintenance, and registration.
Why the monthly payment lies
Dealers sell you a monthly payment, not a car. A lease payment is almost always lower than a loan payment on the same vehicle — because you're only paying for the depreciation during the lease, not the whole car. At the end, you hand it back.
What do the three options really cost
Cash
- Cheapest overall — no interest, ever
- You own the car outright from day one
- Downside: ties up a lot of capital. If you could invest that money at a higher return than the loan rate, financing may make sense
Finance (auto loan)
- You own the car; the interest is the price of spreading it out
- Watch the term. A 72- or 84-month loan lowers the payment but you pay far more interest — and you'll be underwater (owing more than the car is worth) for years
- Rule of thumb: if you can't afford it on a 48–60 month loan, the car is too expensive
Lease
- Lowest monthly payment, newest car, warranty covers most repairs
- You own nothing at the end. You've paid for the depreciation and handed back the car
- Mileage limits (typically 10–12k/year) — overage fees are steep
- Wear-and-tear charges at turn-in can surprise you
When does leasing actually make sense
- You want a new car every 2–3 years and accept that as a cost of living
- You drive low mileage and stay under the cap
- Business use — the payment may be deductible (ask your accountant)
- The car is a model with terrible reliability or fast depreciation — let the leasing company eat it
What does a longer term change
Here is why “how much a month” is the wrong question, in numbers. $35,000 at 7% APR, level payments (our calculation).
| Term | Monthly payment | Total repaid | Total interest | vs 36 months |
|---|---|---|---|---|
| 36 months | $1,081 | $38,905 | $3,905 | — |
| 48 months | $838 | $40,230 | $5,230 | 1.34x |
| 60 months | $693 | $41,583 | $6,583 | 1.69x |
| 72 months | $597 | $42,963 | $7,963 | 2.04x |
| 84 months | $528 | $44,372 | $9,372 | 2.40x |
The payment drops from $1,081 to $528 — less than half — while total interest rises from $3,905 to $9,372, 2.4 times (our calculation). You save $553 a month and pay $5,467 more for the privilege.
The CFPB says only that longer loans expose you to negative equity. Here is the balance behind that.
Why are long terms risky
Transcribed from the Consumer Financial Protection Bureau, checked 30 July 2026.
| Term | CFPB source text |
|---|---|
| APR | “the cost you pay each year to borrow money, including fees, expressed as a percentage” |
| Negative equity | “If you owe more on your current auto loan than the vehicle is worth — referred to as being 'upside down' — then you have negative equity” |
| Link to term length | “A longer loan also puts you at risk for negative equity” |
| Amortization | “the process of gradually paying off your auto loan” — part of each payment to principal, part to interest |
“Including fees” is the load-bearing phrase in the APR definition. The “rate” a dealer quotes may not be the APR — compare APR against APR, always.
That also explains why negative equity travels with term length. Over 84 months the principal barely moves in the early years, while the car keeps depreciating. If you crash it or need to change cars in that window, selling still leaves debt behind. The CFPB page gives no threshold month, so this article says only that the risk grows with the term.
The earlier table varied the term. This one holds the term at sixty months and varies the APR.
Terms the dealer hopes you do not ask about
| Term | What it means |
|---|---|
| Money factor | The lease interest rate in disguise. Multiply by 2,400 to get the APR. (0.00250 = 6% APR) |
| Residual value | What the car is worth at lease end. Higher residual = lower payment |
| Cap cost | The negotiated price. Yes, you can negotiate a lease price — most people don't |
| Doc fee | Dealer paperwork charge. Sometimes negotiable, sometimes capped by state law |
Negotiate the price, not the payment. Settle the out-the-door price first. Only then discuss how you'll pay for it. Dealers can hide a bad price inside a “good” monthly payment by stretching the term.
Compare total cost over the time you'll keep the car, not monthly payments. A lease that looks $150/month cheaper can cost more in the long run — and you end up with nothing.
Sources
- Consumer Financial Protection Bureau — agency source — “Auto loans — key terms” (checked 30 July 2026). Source for the definition of APR (including fees), negative equity and “upside down,” the statement that a longer loan puts you at risk for negative equity, and amortization.
- Consumer Financial Protection Bureau — “What is a foreign transaction fee?” (checked 30 July 2026), for fees on a Korean card used in the US. The layers are in our overseas payment fees article.
- Our own calculation. The monthly payments, totals repaid, total interest and multiples versus 36 months assume $35,000 at 7% APR with level payments — not a table the CFPB publishes.
Where to check further
- The APR your own credit score earns. These figures assume 7% APR and yours may differ a great deal — get a pre-approval from a bank or credit union before visiting the dealer so you walk in holding a real rate.
- State taxes, registration and dealer fees. They vary by state and by dealer, so they are not in this calculation — your state DMV publishes registration costs and rates, and a dealer's out-the-door quote itemises the fees.
- Insurance, maintenance and fuel. Not included here — total cost of ownership diverges again at this point. Get insurance quotes by model before you sign.
As of July 2026. The definitions of APR and negative equity are the CFPB's own wording; the amounts by term are our arithmetic. What is left of a US paycheck is in our paycheck calculator, state taxes in the state taxes article, and credit in the credit score guide. Fees on a Korean card are in the overseas payment fees article.
These are estimates. Actual costs depend on your credit, dealer fees, state and local taxes, and specific lease terms. Insurance, maintenance, and fuel are not included. This is general information, not financial advice.
