Buying vs. Leasing a Car Calculator
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Buying vs. Leasing a Car Calculator
Deciding between buying and leasing a new vehicle is a major financial choice. Leasing often means lower monthly payments, while buying leads to ownership and equity. This calculator helps you compare the total costs of both options over a specific period to see which is more financially advantageous for your situation.
Understanding the Calculation
This calculator determines the net cost of each option over the same period, which is set by the "Lease Term / Comparison Period" field. This allows for a direct, apples-to-apples financial comparison.
- Total Lease Cost: This is the sum of all your payments. It's calculated as:
(Monthly Lease Payment × Lease Term) + Amount Due at Signing. This represents the total cash you will spend to use the car for the lease duration.
- Net Buying Cost: This is more complex. It represents your total expenses minus the value you retain in the car. The calculation is:
(Total Payments Made + Down Payment + Sales Tax) - Estimated Resale Value. Total payments include both principal and interest paid during the comparison period. This shows the true cost of ownership after accounting for the car's remaining worth.
Example Scenario
Let's compare leasing versus buying a car over a 36-month period.
Lease Option:
- Monthly Payment: $450
- Due at Signing: $3,000
- Lease Term: 36 months
- Total Lease Cost: ($450 × 36) + $3,000 = $16,200 + $3,000 = $19,200
Buy Option:
- Vehicle Price: $35,000
- Down Payment: $5,000
- Sales Tax: 7% ($2,450)
- Loan: $30,000 for 60 months at 6.5% APR (Monthly payment is approx. $587)
- Comparison Period: 36 months
- Estimated Resale Value after 36 months: $21,000
- Total Outlay over 36 months: ($587 × 36) + $5,000 (down payment) + $2,450 (tax) = $21,132 + $5,000 + $2,450 = $28,582
- Net Buying Cost: $28,582 (Total Outlay) – $21,000 (Resale Value) = $7,582
In this example, the net cost of buying is significantly lower than the total cost of leasing over the 36-month period. While the monthly payment for buying is higher, you retain substantial value (equity) in the vehicle.
When to Lease vs. When to Buy
Consider Leasing If:
- You want lower monthly payments.
- You enjoy driving a new car every few years with the latest technology and safety features.
- You don't want to deal with the hassle of selling a used car.
- You drive a predictable number of miles each year and can stay within the lease's mileage limits.
- The car is for business use, as leasing can sometimes offer tax advantages.
Consider Buying If:
- You want to own the car outright and build equity.
- You plan to keep the car for a long time, well beyond the loan term, to enjoy years of payment-free driving.
- You drive a lot of miles and don't want to worry about mileage caps and overage fees.
- You want the freedom to customize or modify your vehicle.
- You prefer the long-term financial benefit of ownership, even if it means higher initial monthly payments.
function calculateCosts() {
// — Get LEASE inputs —
var leaseTerm = parseFloat(document.getElementById('leaseTerm').value);
var leaseMonthlyPayment = parseFloat(document.getElementById('leaseMonthlyPayment').value);
var leaseDueAtSigning = parseFloat(document.getElementById('leaseDueAtSigning').value);
// — Get BUY inputs —
var vehiclePrice = parseFloat(document.getElementById('vehiclePrice').value);
var buyDownPayment = parseFloat(document.getElementById('buyDownPayment').value);
var salesTax = parseFloat(document.getElementById('salesTax').value);
var loanTerm = parseFloat(document.getElementById('loanTerm').value);
var loanAPR = parseFloat(document.getElementById('loanAPR').value);
var resaleValue = parseFloat(document.getElementById('resaleValue').value);
// — Input Validation —
var inputs = [leaseTerm, leaseMonthlyPayment, leaseDueAtSigning, vehiclePrice, buyDownPayment, salesTax, loanTerm, loanAPR, resaleValue];
for (var i = 0; i < inputs.length; i++) {
if (isNaN(inputs[i]) || inputs[i] < 0) {
document.getElementById('result').style.display = 'block';
document.getElementById('result').innerHTML = 'Error: Please enter valid, non-negative numbers in all fields.';
return;
}
}
if (leaseTerm <= 0 || loanTerm = vehiclePrice) {
document.getElementById('result').style.display = 'block';
document.getElementById('result').innerHTML = 'Error: Down payment cannot be greater than or equal to the vehicle price.';
return;
}
// — LEASE Calculation —
var totalLeaseCost = (leaseMonthlyPayment * leaseTerm) + leaseDueAtSigning;
// — BUY Calculation —
var salesTaxAmount = vehiclePrice * (salesTax / 100);
var loanAmount = vehiclePrice – buyDownPayment;
var monthlyInterestRate = (loanAPR / 100) / 12;
var numberOfPayments = loanTerm;
var monthlyLoanPayment = 0;
if (loanAmount > 0 && monthlyInterestRate > 0) {
monthlyLoanPayment = loanAmount * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
} else if (loanAmount > 0) { // 0% interest case
monthlyLoanPayment = loanAmount / numberOfPayments;
}
// Total cash paid out during the comparison period (which is the leaseTerm)
var comparisonPeriod = leaseTerm;
var totalPaymentsMade = monthlyLoanPayment * Math.min(comparisonPeriod, numberOfPayments);
var totalBuyOutlay = totalPaymentsMade + buyDownPayment + salesTaxAmount;
// Net cost of buying is the total outlay minus the car's value at the end
var netBuyingCost = totalBuyOutlay – resaleValue;
// — Display Results —
var resultDiv = document.getElementById('result');
var resultHTML = '
Comparison over ' + leaseTerm + ' months
';
resultHTML += '
';
resultHTML += '
';
resultHTML += '
Total Lease Cost
';
resultHTML += '$' + totalLeaseCost.toFixed(2) + ";
resultHTML += '';
resultHTML += '
';
resultHTML += '
Net Buying Cost
';
resultHTML += '$' + netBuyingCost.toFixed(2) + ";
resultHTML += '';
resultHTML += '
';
var difference = Math.abs(totalLeaseCost – netBuyingCost);
var verdict = ";
if (netBuyingCost < totalLeaseCost) {
verdict = 'Based on these numbers,
buying is cheaper by
$' + difference.toFixed(2) + ' over ' + leaseTerm + ' months.';
} else if (totalLeaseCost < netBuyingCost) {
verdict = 'Based on these numbers,
leasing is cheaper by
$' + difference.toFixed(2) + ' over ' + leaseTerm + ' months.';
} else {
verdict = 'The costs are identical over ' + leaseTerm + ' months.';
}
resultHTML += '
' + verdict + '
';
resultHTML += 'Note: Net Buying Cost = (Total Loan Payments + Down Payment + Sales Tax) – Resale Value. This reflects your total expense after accounting for the asset\'s value.';
resultDiv.innerHTML = resultHTML;
resultDiv.style.display = 'block';
}