Lease vs. Buy Calculator

Should you lease or finance your next car?

There is a lot to think about when deciding on a car purchase. You will have to assess your finances and evaluate your vehicle needs. Here you can find all the considerations when it comes to leasing or buying a car. Plus, our calculator can help you work out your payments. Just add your automobile offers to the system, to compare your options. This way you can make the best choice for your situation.
The difference between leasing and buying
When it comes to making a big purchase, like a car or appliance, you always have a few options. If you have enough savings, you can use your funds to make the purchase. If you don’t, borrowing money from a trusted lender can help to cover the cost of the vehicle.
With both of these options, you pay the total cost of the item to own it. If you need financing, your payments get split up into equal monthly portions. Those dues could be structured over three to six years. Plus you could score some great buyer incentives. Things like your interest rate and the loan amount can affect your payment.
Another option is to lease. In the case of an auto lease, you get the vehicle for some years before you have to return it. During the lease, the car belongs to the manufacturer but is under your care. Once the agreement ends, you can buy out the vehicle for the remaining value or bring it back.
Lease payments are also structured differently from financing payments. There are three components to a lease. Part of the cost is based on how much value the vehicle loses while you drive it. The lost value is called depreciation. There is also an additional fee for the leasing service. In most instances, there is a state sales tax added to your monthly dues as well.
The most obvious difference is that you get a new car every few years with a lease. However, there are various advantages to both options. Under important considerations, you can see how equity, monthly payments, and mileage should impact your decision to buy.
Important considerations
There are many things to consider when it comes to vehicle ownership.
The monthly obligation. Part of your decision may be related to what you can afford. Leasing a car can provide a lower monthly payment than financing under similar conditions. It could save you money each month on the payment, which can be helpful if you are on a tight budget. With leasing, you will only pay for the worth of the car during the time you use it. This can reduce the total cost by as much as forty percent. The lower values could allow you to lease a car that may be more valuable than one you would buy.
Your down payment or vehicle trade-in value. The money you have for your down payment should affect your choice too. If you have a sizeable down payment, you can save a lot on your monthly loan costs. If you don’t have much saved or have a low-value vehicle for trade in, leasing may be a better option. Renting has a lesser initial impact on your budget and cash flow.
The amount you drive. You will have to consider your transportation needs before getting into a lease. There is a cap on how many miles you can drive each year. The mileage will vary per lease agreement but is usually 12,000 miles a year. Any driving you do over that can cost you 15 cents, or more, per mile. If you think you might go over, or just want the freedom, it may be better to buy.
How long you want the car for. Think about the length of time you mean to have the car. With a lease, you can change cars more frequently. You can get safe cars with great new features often. You just have to stick to the terms of the lease. There are hefty penalties for trying to get out of the agreement before the term is over. The longer you want to keep the car, the more sense it makes to buy.
Equity. The main drawback of a lease is that you are just renting the car for a few years. You only finance the vehicle for the time that it’s under your care. At the end of the lease, you won’t have a trade-in vehicle and can’t recoup costs for a new down payment.
Your credit score. Consumers with good credit are more likely to qualify for a lease. Those with challenged with credit will have a difficult time. If you have had problems with your debts, it will be easier to purchase a new or used car.
How well you can maintain the car. Your ability to care for a vehicle is an importation factor. When you return a car after a lease, you can pay high wear and tear fees if you are not careful. Things like bumps, scratches, or damage to the interior could be costly. If you are prone to accidents, have young kids or pets, it might be better to buy.
In short, there is no exact answer to which option is best. It depends a lot on your circumstance. To decide what is better, you’re best to crunch some numbers. It also helps to be honest about your lifestyle preferences. If you have good credit, like the latest technology, and are careful with your car, leasing may be a good option. Even though it costs more over time. However, if you are concerned with your equity, do a lot a driving, and don’t like to read the fine print, buying can give you peace of mind.
What is this calculator for?
Our calculator is designed to help you compare payments between leasing and financing a car. It can help you figure out if a new make or model fits within your budget. All you have to add is the vehicle price, lease and financing conditions.
If you have already been to the dealership, you can use this tool to review your options. There can be a lot of information provided by the sales representative. Plug in the figures you were given to weigh your choices again.
This calculator can also be useful for anyone nearing the end of a current lease. It can help you decide if you should get another lease or purchase your next vehicle. Doing your research ahead of time can help you negotiate the best deal. By trying out different terms and interest rates, you can figure out what payment you can manage.
However, your decision to lease or buy might not be based on the monthly payment alone. There are other factors like the length of time you will need the car for and your lifestyle that can sway your choice.
How to use the calculator
The lease or buy calculator is easy to use. It has two parts: an information intake and a results section. Before getting started, you should have your auto details on hand.
Step 1: On the first line of the calculator you can state the total purchase price of the car. You can use the arrow features or keypad to make this input.
Step 2: You can add a down payment total to the second line. In this amount include any savings or the trade in value of your current vehicle.
Step 3: Add your state sales tax rate on the third line of the calculator. This figure will be included in your monthly lease payment or on the overall purchase price of the car.
Step 4: If you were to save your down payment instead of putting it towards a vehicle, you could add the details to the line four. Here you can state what rate of return you would be getting from an investment or a savings account.
Step 5: In the next section, you can include your financing information. This pertains to the loan term, which can be anything from 24 months to 60 months.
You can apply a reasonable interest rate and include other fees. Additional costs could be for plate registration, administrative charges, and shipping.
Step 6: Include a rate of depreciation on the next line. This figure will gauge how much value your car loses annually. Different makes and models will have different rates they lose equity at. However, most cars depreciate between 10% to 20% each year.
Step 7: In the final section, you can add your lease details. This requires the length of the lease and the annual interest rate for the service. The interest rate can also be called a money factor. Often this figure it is similar to the interest rate on the vehicle loan financing.
Step 8: Still under lease option, you can include other fees for plates or processing and a security deposit.
Step 9: Lastly, identify a residual value for the car. The more the car depreciates, the higher your payments will be. Alternatively, a car that maintains its value will have lower lease payments.
Step 10: Please view your results.
Your results
You will be provided with various summaries, charts, and tables to compare your options.
To the right of the inputs, you can see a few smart prompt summaries. Here you can view the net cost of your purchase versus the net cost of the lease. You can also consider the factors that impact each. The purchase cost is affected by the loan, down payment, and equity in the vehicle, while the cost of leasing is structured on upfront costs and monthly dues.
Below the inputs are two detailed tables. The first is your results summary. Here you can compare all the fees side by side. Your monthly payments are listed on the last line in the table. You can also highlight any row by selecting it.
The next tab is the net cost summary. Here you can compare the value of buying versus leasing. You can see what the market value of the car is at the end of the lease. Plus, what it would cost you if you had chosen to finance it.
With this information, you can understand the actual value of your options. This can help you decide which choice might be more suitable for your budget. Beyond the finances, you should account for all the pros and cons before making a decision.
Remember to bookmark the lease or buy a car calculator. You can save it to the home screen of your smart phone and return as you find different offers. If you found this page useful, you can promote us on social media using the share feature.