Deciding whether to lease or buy a new car is a significant financial decision. Both options have distinct advantages and disadvantages, and the "better" choice depends heavily on your driving habits, financial situation, and preferences. This calculator helps you compare the estimated total costs of both options over a comparable period, providing insights to make an informed choice.
How the Calculator Works
The calculator breaks down the costs associated with both leasing and buying a vehicle. Here's a look at the key calculations:
Buying a Car:
When you buy a car, you are essentially financing the entire purchase price (minus any down payment). The total cost includes:
Principal Loan Amount: Vehicle Price – Down Payment.
Total Interest Paid: Calculated based on the loan amount, loan term, and annual interest rate.
Ownership Costs: This includes estimated annual maintenance, repairs, and insurance costs prorated over the loan term.
Resale Value: The estimated value of the car at the end of your loan term, which effectively reduces your net cost of ownership.
The calculator aims to estimate the total out-of-pocket expenses for buying, considering the car's eventual resale value.
Leasing a Car:
Leasing is essentially a long-term rental agreement. You pay for the depreciation of the vehicle during the lease term, plus financing charges and fees. The total cost includes:
Depreciation Cost: The difference between the vehicle's price and its estimated residual value at the end of the lease term. This is the amount you're truly "paying for" during the lease.
Finance Charge (Rent Charge): Calculated based on the average money financed (often simplified by the calculator to consider the vehicle price and residual value) and the lease financing rate.
Lease Fees: Acquisition fees (charged by the leasing company) and disposition fees (charged at the end of the lease).
Mileage Charges: While not directly calculated by this simplified calculator, exceeding your estimated annual mileage will incur extra charges, a crucial factor for high-mileage drivers.
Maintenance and Insurance: Similar to buying, though often leases require higher insurance coverage.
The calculator estimates the total out-of-pocket expenses for leasing over the specified lease term.
Key Considerations:
Mileage: Leasing typically has mileage limits (e.g., 10,000, 12,000, or 15,000 miles per year). Exceeding these limits results in significant per-mile charges. If you drive a lot, buying is often more economical.
Customization: You generally cannot modify leased vehicles. If you like to customize your car, buying is the way to go.
Monthly Payments: Lease payments are often lower than loan payments for the same car because you're only paying for the depreciation, not the full price.
Ownership: At the end of a loan, you own the car. At the end of a lease, you return the car (or have the option to buy it).
Long-Term Costs: While monthly lease payments might be lower, over many years, buying can sometimes be cheaper, especially if you keep the car for a long time and it holds its value well.
Wear and Tear: Leases often have strict guidelines on wear and tear. Excessive damage can lead to hefty fees upon return.
Use this calculator as a starting point. Always review the specific terms and conditions of any purchase or lease agreement with a dealership, as additional fees, taxes, and specific contract details can influence the final cost.
function calculateLeaseVsBuy() {
// — Get Input Values —
var vehiclePrice = parseFloat(document.getElementById("vehiclePrice").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var loanTermMonths = parseInt(document.getElementById("loanTerm").value);
var annualInterestRateBuy = parseFloat(document.getElementById("annualInterestRateBuy").value) / 100; // Convert to decimal
var estimatedAnnualMileage = parseInt(document.getElementById("estimatedAnnualMileage").value);
var leaseTermMonths = parseInt(document.getElementById("leaseTermMonths").value);
var residualValuePercentage = parseFloat(document.getElementById("residualValuePercentage").value) / 100; // Convert to decimal
var leaseInterestRate = parseFloat(document.getElementById("leaseInterestRate").value) / 100; // Convert to decimal
var leaseAcquisitionFee = parseFloat(document.getElementById("leaseAcquisitionFee").value);
var leaseDispositionFee = parseFloat(document.getElementById("leaseDispositionFee").value);
var maintenanceCostsPerYear = parseFloat(document.getElementById("maintenanceCostsPerYear").value);
var insuranceCostsPerYear = parseFloat(document.getElementById("insuranceCostsPerYear").value);
var resaleValueAtEnd = parseFloat(document.getElementById("resaleValueAtEnd").value);
// — Input Validation —
if (isNaN(vehiclePrice) || vehiclePrice <= 0) {
alert("Please enter a valid Vehicle Price.");
return;
}
if (isNaN(downPayment) || downPayment < 0) {
alert("Please enter a valid Down Payment.");
return;
}
if (isNaN(loanTermMonths) || loanTermMonths <= 0) {
alert("Please enter a valid Loan Term in months.");
return;
}
if (isNaN(annualInterestRateBuy) || annualInterestRateBuy < 0) {
alert("Please enter a valid Annual Interest Rate for buying.");
return;
}
if (isNaN(estimatedAnnualMileage) || estimatedAnnualMileage < 0) {
alert("Please enter a valid Estimated Annual Mileage.");
return;
}
if (isNaN(leaseTermMonths) || leaseTermMonths <= 0) {
alert("Please enter a valid Lease Term in months.");
return;
}
if (isNaN(residualValuePercentage) || residualValuePercentage = 1) {
alert("Please enter a valid Residual Value Percentage between 0 and 100.");
return;
}
if (isNaN(leaseInterestRate) || leaseInterestRate < 0) {
alert("Please enter a valid Lease Financing Rate.");
return;
}
if (isNaN(maintenanceCostsPerYear) || maintenanceCostsPerYear < 0) {
alert("Please enter valid Annual Maintenance Costs.");
return;
}
if (isNaN(insuranceCostsPerYear) || insuranceCostsPerYear < 0) {
alert("Please enter valid Annual Insurance Costs.");
return;
}
if (isNaN(resaleValueAtEnd) || resaleValueAtEnd 0, just ensure they are numbers.
if (isNaN(leaseAcquisitionFee)) leaseAcquisitionFee = 0;
if (isNaN(leaseDispositionFee)) leaseDispositionFee = 0;
// — Calculations for Buying —
var principalLoanAmountBuy = vehiclePrice – downPayment;
var monthlyInterestRateBuy = annualInterestRateBuy / 12;
var monthlyBuyPayment = 0;
var totalInterestPaidBuy = 0;
var totalBuyCost = 0;
if (principalLoanAmountBuy > 0 && monthlyInterestRateBuy > 0) {
// Standard Loan Payment Formula (M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1])
monthlyBuyPayment = principalLoanAmountBuy * (monthlyInterestRateBuy * Math.pow(1 + monthlyInterestRateBuy, loanTermMonths)) / (Math.pow(1 + monthlyInterestRateBuy, loanTermMonths) – 1);
totalInterestPaidBuy = (monthlyBuyPayment * loanTermMonths) – principalLoanAmountBuy;
totalBuyCost = vehiclePrice – resaleValueAtEnd + totalInterestPaidBuy + (maintenanceCostsPerYear * (loanTermMonths / 12)) + (insuranceCostsPerYear * (loanTermMonths / 12));
} else { // If no loan is needed (e.g., paid in cash or down payment covers full price)
monthlyBuyPayment = 0;
totalInterestPaidBuy = 0;
totalBuyCost = vehiclePrice – resaleValueAtEnd + (maintenanceCostsPerYear * (loanTermMonths / 12)) + (insuranceCostsPerYear * (loanTermMonths / 12));
}
// — Calculations for Leasing —
var residualValueAmount = vehiclePrice * residualValuePercentage;
var depreciationCost = vehiclePrice – residualValueAmount;
var averageMonthlyFinanced = (vehiclePrice + residualValueAmount) / 2; // Simplified approximation
var monthlyLeasePaymentBeforeFees = 0;
var totalLeaseFinanceCharge = 0;
var totalLeaseCost = 0;
if (leaseTermMonths > 0 && leaseInterestRate > 0) {
// Simple Interest calculation for lease payments
totalLeaseFinanceCharge = (averageMonthlyFinanced * leaseInterestRate * leaseTermMonths) / 12;
monthlyLeasePaymentBeforeFees = (depreciationCost + totalLeaseFinanceCharge) / leaseTermMonths;
} else {
monthlyLeasePaymentBeforeFees = depreciationCost / leaseTermMonths;
}
var totalLeasePayment = monthlyLeasePaymentBeforeFees * leaseTermMonths;
var totalLeaseFees = leaseAcquisitionFee + leaseDispositionFee;
var totalLeaseCost = totalLeasePayment + totalLeaseFees + (maintenanceCostsPerYear * (leaseTermMonths / 12)) + (insuranceCostsPerYear * (leaseTermMonths / 12));
var monthlyLeasePayment = monthlyLeasePaymentBeforeFees + (totalLeaseFees / leaseTermMonths); // Distribute fees monthly for comparison
// — Display Results —
document.getElementById("totalBuyCost").innerText = formatCurrency(totalBuyCost);
document.getElementById("totalLeaseCost").innerText = formatCurrency(totalLeaseCost);
document.getElementById("monthlyBuy").innerText = formatCurrency(monthlyBuyPayment);
document.getElementById("monthlyLease").innerText = formatCurrency(monthlyLeasePayment);
var difference = totalBuyCost – totalLeaseCost;
var differenceText = formatCurrency(difference);
var differenceInsight = "";
if (difference > 0) {
differenceInsight = `Leasing is estimated to be ${differenceText} cheaper over the period.`;
} else if (difference < 0) {
differenceInsight = `Buying is estimated to be ${formatCurrency(Math.abs(difference))} cheaper over the period.`;
} else {
differenceInsight = "The estimated costs are roughly equal.";
}
document.getElementById("costDifference").innerText = differenceInsight;
}
function formatCurrency(amount) {
return "$" + amount.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,');
}