Lease or Buy Calculator
Use this Lease versus Buy calculator to compare the costs of leasing a car versus buying with an auto loan, including comparison of payments, total costs, taxes and finance charges. Financial costs, however, are not the only consideration when making a lease or buy decision. For more details, see Lease vs Buy.
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Lease or Buy Calculator Explanation
A lease-vs-buy calculator is useful when attempting to determine the best choice between leasing or buying a car from a financial point of view. Which way produces the lowest monthly payment? Which has the lowest overall cost? An online calculator allows you to perform this kind of comparison easily and quickly. By adjusting parameters and quickly seeing the results, you can conveniently “play” with difference scenarios and find the best option for your needs.
Although car lease payments are always considerably less than loan payments, a lease-or-buy calculator allows you to possibly adjust the loan term and down payment amount to create a payment equivalent to a shorter-term lease payment. Your decision then becomes one of choosing between a lease of, say 3 years, versus a loan of 5 or 7 years. Make sure, however, when making such a decision, that you consider other, non-financial, factors that are explained in detail in our article, Who Should Lease?
Be aware that a lease-or-buy calculator doesn’t fully account for some differences between a car lease and car purchase — such as differences in the way sales tax is applied, which varies between states. In most states, sales tax is applied to each lease payment, not the entire value of the vehicle. This means, with leasing, less tax is paid.
There are also differences between lease and loan finance companies as to how much insurance is required. Some require full coverage, others do not. Leasing also has some fees that a purchase doesn’t have, such as an acquisition fee up front and a disposition fee at lease-end, although these fees don’t contribute significantly to a lease-or-buy comparison. Furthermore, ending a lease early can be more expensive than ending a purchase loan early, which is a result of lower monthly payments.