function calculateLeaseVsBuy() {
// Get Inputs
var price = parseFloat(document.getElementById('vehiclePrice').value) || 0;
var down = parseFloat(document.getElementById('downPayment').value) || 0;
// Financing Calculations
var loanTerm = parseFloat(document.getElementById('loanTerm').value) || 1;
var annualRate = parseFloat(document.getElementById('loanRate').value) || 0;
var monthlyRate = (annualRate / 100) / 12;
var loanAmount = price – down;
var buyMonthly = 0;
if (monthlyRate === 0) {
buyMonthly = loanAmount / loanTerm;
} else {
buyMonthly = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, loanTerm)) / (Math.pow(1 + monthlyRate, loanTerm) – 1);
}
// Lease Calculations
var leaseTerm = parseFloat(document.getElementById('leaseTerm').value) || 1;
var moneyFactor = parseFloat(document.getElementById('moneyFactor').value) || 0;
var residual = parseFloat(document.getElementById('residualValue').value) || 0;
var depreciationFee = (price – down – residual) / leaseTerm;
var financeFee = (price – down + residual) * moneyFactor;
var leaseMonthly = depreciationFee + financeFee;
// Total Cost Over Term Comparison (Net Cost)
var totalBuyCost = (buyMonthly * leaseTerm) + down;
// Note: To compare fairly, we look at the same time period as the lease
// We assume the car is sold or kept as equity after the lease term
var buyEquity = price – (loanAmount * (Math.pow(1+monthlyRate, loanTerm) – Math.pow(1+monthlyRate, leaseTerm)) / (Math.pow(1+monthlyRate, loanTerm) – 1));
// A simpler way for users: Total out of pocket vs ownership value
// Display results
document.getElementById('resultsArea').style.display = 'block';
document.getElementById('buyMonthly').innerText = '$' + buyMonthly.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('leaseMonthly').innerText = '$' + leaseMonthly.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
var difference = Math.abs(buyMonthly – leaseMonthly).toFixed(2);
var cheaper = buyMonthly < leaseMonthly ? "Buying" : "Leasing";
var summary = "Analysis:";
summary += "Leasing this vehicle would save you approximately $" + difference + " per month in cash flow compared to financing. ";
summary += "However, after " + leaseTerm + " months of financing, you would own a portion of the vehicle's equity, whereas with the lease, you must return the car or pay the residual value of $" + residual.toLocaleString() + " to own it.";
document.getElementById('summaryText').innerHTML = summary;
}
Car Lease vs. Buy: Which Financial Move is Better?
Deciding whether to lease or buy a car is one of the most significant financial decisions for any household. While both options put you behind the wheel of a new vehicle, the underlying mechanics of the contracts are vastly different. Our Car Lease vs. Buy Calculator helps you break down the monthly costs to see which fits your budget today and your goals tomorrow.
Understanding the Math of Leasing
When you lease, you aren't paying for the whole car. You are paying for the depreciation that occurs during the time you drive it. The formula is essentially:
Depreciation Fee: (Net Cap Cost – Residual Value) / Lease Term
The Money Factor is a lease-specific term for interest. To find the equivalent APR, multiply the money factor by 2,400.
The Benefits of Buying (Financing)
When you finance a car, every payment you make builds equity. Once the loan is paid off, the vehicle is an asset you own outright. While the monthly payments are typically higher because you are paying off the full purchase price plus interest, the long-term cost of ownership is generally lower if you keep the car for more than 5 years.
Key Differences at a Glance
Feature
Lease
Buy
Monthly Payments
Lower (usually)
Higher
Ownership
None (Rental)
Full (after loan)
Mileage Limits
Strict (10k-15k/year)
Unlimited
Wear & Tear
Penalties apply
Your responsibility
How to Use This Calculator
Vehicle Price: Enter the negotiated price of the car (MSRP minus discounts).
Down Payment: The cash you are putting down upfront. For leases, this is often called a "Capitalized Cost Reduction."
Money Factor: Ask your dealer for this number. If they give you an interest rate, divide it by 2,400 (e.g., 6% / 2400 = 0.0025).
Residual Value: The estimated value of the car at the end of the lease. This is set by the leasing company.
Pro Tip: If you enjoy driving a new car every 3 years and drive less than 12,000 miles per year, leasing is often the most convenient option. If you want to stop making car payments eventually, financing is the way to go.