![]() ![]() My Personal Preferenceīased on my financial situation, auto needs, and a big list of other things I'd rather spend my money on than car depreciation, I will always choose to buy over leasing. Because the same lease payment will afford you more car than the same loan payment, leasing will likely afford you to drive higher end or higher tech cars (electric, etc.). You want to drive the latest cars with the latest technologies. Because you're only paying for a portion of the car instead of all of it, car lease payments are typically lower than car loan payments. You expect to drive the vehicle less than 10,000 miles per year, you are not concerned with the likelihood of minor damage, and you have no desire to customize the vehicle. ![]() Customization is not permitted in the case of a lease. Not so with leasing, as the leasing company will charge you for that damage at the end of the lease. If you purchase the car and it gets minor dings, dents, and paint scuffs, you can choose to ignore them. You're concerned about the likelihood of minor damage occurring to the vehicle. These monthly payments you no longer have to make can then be used to save up a sizeable down payment for your next auto purchase. This is because you will eventually pay the car off and no longer have any monthly payments. You expect to own the car for a long period of time (6-10 years or more). If you exceed the mileage limit, you will end up paying a fee (fine) for the excess miles. This is because a lease usually limits the number of miles you can drive to 10,000 to 15,000 miles per year. You expect to drive more than 15,000 miles per year. If you're asking "should I lease or buy a car?", the answer depends on your financial situation and on how you intend to use and care for the vehicle. In this case, you do have the opportunity to build up equity if you are paying down the car loan faster than the car is depreciating. On the other hand, if you take a loan out to purchase a car, you will end paying for the drop in value from the time you purchase the car to the time you sell or scrap the vehicle. This means you won't ever build up any equity in the vehicle (equity is the difference between what you could sell the car for and what you owe on the car). In the case of leasing, you are paying for the drop in the value of the car (depreciation) between the start of the lease and the end of the lease. If you're new to the car buying game, the major difference between leasing a car and financing a car is that leasing is paying for only a portion of the car, whereas financing a car is paying for all of the car. Step #11:Ĭlick the "Calculate Lease Vs Buy" button and scroll down to see the results. Step #10:Įnter the security deposit required for the lease and the number of years would expect to own the car if you were to purchase it instead of lease it. Step #9:Įnter the residual percentage for the lease and the depreciation percentage for the car purchase. Step #8:Įnter any upfront fees that will be paid at the start of the lease, and the upfront fees that would apply to the car purchase. Step #7:Įnter the money factor for the lease and the annual percentage rate for the car loan. Step #6:Įnter the number of months for the lease and the number of months for the car loan. Step #5:Įnter the number of years you want the calculator to repeat the buy or lease scenario. Step #4:Įnter the percentage you would expect to earn on your investments. Step #3:Įnter the sales tax percentage that will apply to the purchase or lease. Step #2:Įnter the down payment amount, if applicable. Step #1:Įnter the purchase price of the car. (only digits 0-9 and decimal points are allowed).Ĭlick the Terms tab above for a more detailed description of each entry. IMPORTANT: Numeric entry fields must not contain dollar signs, percent signs, commas, spaces, etc. Any lost interest from leasing is deducted from this amount and the leasing lost interest is set to zero. 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 buying is deducted from this amount and the buying lost interest is set to zero.īuy 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 leasing versus buying. 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. ![]()
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