Buying vs. Leasing - Auto

Compare the cost of buying or leasing an automobile.

To open this calculator, click Calculators in the toolbar, and then click Personal Finance > Buying vs. Leasing - Auto in the left panel.

You can export the data as a PDF file or clear all data that you entered. For more information, see Financial calculators.

Notes

  • Since the option to buy provides equity in the auto, the calculator subtracts this amount from total costs to arrive at the amount in the Net cost field.
  • The calculator determines the Ending market value field by multiplying the amount in the Residual percent field by the amount in the Purchase price field.
  • The Lost interest on payments field displays the interest that could have been earned if the money spent on the auto had been invested instead.

Example

Field Input
Purchase price $20,000
Sales tax rate 7%
Residual percentage 60%
Buying Leasing
Down payment $1,000 $1,000
Term of loan or lease in months 60 24
Annual interest rate 8%
Monthly payment $424.35
Annual rate of return 8% 8%

Notes

  • The Residual percentage equals the value of the car at the end of the lease period.
  • The Annual interest rate is the interest rate on the loan used to purchase the automobile.
  • The Annual rate of return is the rate of return expected on invested funds.

In this example, leasing would cost less than buying over the 24 month period used in this comparison. The difference between the two options is $922.18.

Internal notes


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