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Car Lease vs Buy Calculator to Calculate Cost Comparison

Calculator Preferences
Car Lease vs Buy Calculator

This calculator will calculate a year-to-year comparison between the cost of leasing and the cost of buying a car, as well as the long term consequences of repeating the lease or purchase each time you acquire a vehicle. The $ecret tab includes:

  • Why buying should always save money over leasing.
  • Why paying cash for a vehicle is the only way to make a wise car buying decision.
Learn More

Selected Data Record:

A Data Record is a set of calculator entries that are stored in your web browser's Local Storage. If a Data Record is currently selected in the "Data" tab, this line will list the name you gave to that data record. If no data record is selected, or you have no entries stored for this calculator, the line will display "None".

DataData recordData recordSelected data record: None
Mutual Entries
Buy price:Purchase price:Purchase price:Purchase price:

Purchase price:

Enter the purchase price of the car less any dealer rebates or cash incentives. This price will be used for both buying and leasing scenarios.

Down pmt:Down payment:Down payment:Down payment:

Down payment:

Enter the amount of cash you plan to pay up front. For leasing, the amount is referred to as a prepayment, as in the prepayment of depreciation. For buying, this amount is referred to as a down payment, which effectively lowers the amount of money you need to borrow for the purchase.

Sales tax:Sales tax rate:Sales tax rate:Sales tax rate:

Sales tax rate:

Enter the combined total percentage of all applicable tax rates (state, local, etc.). Enter as a percentage but without the percent sign (for .07 or 7%, enter 7). For leasing, the taxes will be added to each lease payment. For buying, the taxes will be included in the loan amount.

ROI:Expected ROI:Rate of return on investments:Rate of return on investments:

Rate of return on investments:

Enter the annual percentage return you expect to earn on your investments. Enter as a percentage but without the percent sign (for .06 or 6%, enter 6). This entry will be used to calculate lost interest earnings that may result from choosing buying instead of leasing or visa versa.

# years:# of years:Number of years to compare:Number of years to compare lease vs buy:

Number of years to compare lease vs buy:

Enter the number of years you would like run the lease vs buy scenario for. A new car lease will be generated at the end of each lease, and a new car purchase will be generated at the end of each ownership term.

Split entries

Split entries:

Lease: Lease entry fields are located in the left-hand fields.

Buy: Buy entry fields are located in the right-hand fields.

Lease
Buy
Months:

Months:

Lease: Enter the lease term in number of months into the left-hand field. The typical lease term is 24 months. Lease terms over 36 months will usually offset any benefits to be gained by leasing.

Buy: Enter the loan term in number of months into the right-hand field. The shorter the loan term, the higher the monthly payments will be and the lower the finance charges will be. Conversely, the longer the loan term, the lower the monthly payments, but the higher the finance charges will be.

Interest rate:

Interest rate:

Lease: Enter the annual interest rate of the lease into the left-hand field. If the lease terms state a Money Factor, multiply the money factor by 2,400 to arrive at the annual interest rate. Enter the interest rate as a percentage, but without the percent sign (for .09 or 9%, enter 9).

Buy: Enter the annual interest rate of the car loan into the right-hand field. Enter the interest rate as a percentage, but without the percent sign (for .09 or 9%, enter 9).

Fees:

Fees:

Lease: Enter the total of any upfront fees that will be due at signing (acquisition fees, etc.) into the left-hand field.

Buy: Enter the total of any upfront fees that will be due at the time of purchase (title, transfer, loan fees, etc.) into the right-hand field.

Both: Enter as dollar amounts but without the dollar sign or any commas. Also, do not include the down payment as it has its own entry field at the top of the car lease vs buy calculator.

Residual and depreciation:

Residual and depreciation percentages:

Lease: Enter the expected residual value percentage (RV%) into the left-hand field. The residual value percentage estimates the market value of the car at the end of the lease. So if the RV% is 55%, the car is expected to be worth 55% of its original purchase price at the end of the lease. As a reference point, the RV% is usually 50%-58% for a 36 month lease.

Buy: Enter the annual depreciation percentage of the vehicle into the right-hand field. If you expect the car to depreciate quickly, enter 20%. For average rate of depreciation, enter 15%. For a car that holds its value for a longer period of time (typically high-end vehicles), enter 10%.

Both: Enter as percentages, but without the percent sign.

Security dep and own years:

Security deposit and own years:

Lease: Enter the amount of any security deposit that may be required at the beginning of the lease into the left-hand field. This figure will be used in calculating lost interest earnings when choosing leasing over buying.

Buy: Enter the number of years you plan to own the car for before trading it in on a new car. Typically the longer you hold on to the car, the more buying the car will save over leasing the car. This is because the average annual cost of depreciation decreases the longer you own the car. Plus, if you hold onto the car for longer than the loan term, there will be months when you will have no monthly car loan payments.

Calculated Results
Tap the text for a description of each row result.
CompareLeaseBuy
Payment:

Payment:

Lease column: Based on your entries, this is the calculated amount of your monthly lease payment. This amount will be fixed for the number of years you indicated you would like the scenario played out for.

Buy column: Based on your entries, this is the calculated monthly car loan payment. This amount may change during the number of years you indicated you would like the scenario played out for. If the car is depreciating faster than you are paying off the loan, the payment will increase during the next buy year. If you are paying the car loan off faster than the car is dropping in value, the payment will decrease in the next buy year -- because the excess market value can be used to trade-in on the new car -- thus lowering the loan amount.

Expenses:

Expenses:

Lease column: This is the calculated total of the combined lease expenses for the number of years you indicated you would like the scenario played out for.

Buy column: This is the calculated total of the combined buy expenses for the number of years you indicated you would like the scenario played out for. Note that the only portion of a monthly car loan payment that is an actual expense, is the interest portion of the payment. The other actual expense occurs as the market value of the car drops (depreciates). The specific amount of the depreciation expense cannot be determined until the car is actually sold, traded-in, or scrapped. Therefore all depreciation expenses are merely estimates based on the annual depreciation rate you entered.

Lost interest:

Lost interest:

Lease column: This is the estimated amount of interest earnings you would lose if you chose to lease at the terms you entered instead of buy at the terms you entered -- for the number of years you indicated you wanted to scenario to be played out for. Essentially this measures how much investment interest you could have earned if you invested the cash flow savings from leasing versus buying. Any lost interest from buying is deducted from this amount and the buying lost interest is set to zero.

Buy column: This is the estimated amount of interest earnings you would lose if you chose to buy at the terms you entered instead of lease at the terms you entered -- for the number of years you indicated you wanted to scenario to be played out for. Essentially this measures how much investment interest you could have earned if you invested the cash flow savings from buying versus leasing. Any lost interest from leasing is deducted from this amount and the leasing lost interest is set to zero.

Net cost:

Net cost:

Lease column: This is the total of the leasing expenses and lost interest earnings for the number of years you indicated you would like the scenario played out for.

Buy column: This is the total of the buying expenses and lost interest earnings for the number of years you indicated you would like the scenario played out for.

If you would like to save the current entries to the secure database, tap or click on the Data tab, select "New Data Record", give the data record a name, then tap or click the Save button. To save changes to previously saved entries, simply tap the Save button. Please select and "Clear" any data records you no longer need.

Feedback AppreciatedFeedback Greatly AppreciatedYour Feedback Would Be Greatly AppreciatedYour Feedback Is Greatly Appreciated
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