Deciding whether to lease or buy a car is a significant financial decision. Both options have distinct advantages and disadvantages, and the best choice for you depends heavily on your driving habits, financial situation, and personal preferences. This calculator helps you compare the estimated total costs over a typical ownership period.
Understanding the Math Behind the Calculator
Leasing Costs Calculation:
Leasing essentially means renting a car for a fixed period, typically 2-4 years. Your monthly payments cover the car's depreciation during that period, plus interest (called a money factor) and fees.
Total Lease Payments: (Monthly Lease Payment * Lease Term in Months) + Lease Down Payment/Fees
Excess Mileage Cost: This is calculated if your total driven miles (Annual Mileage Allowance * Lease Term in Years) exceed the total allowance (Lease Term in Months / 12 * Annual Mileage Allowance). The cost is (Actual Miles Driven – Allowed Miles) * Excess Mileage Charge. For simplicity in this calculator, we assume you drive your typical annual mileage, and this cost is factored in if it exceeds the lease allowance.
Estimated Total Cost of Leasing: Total Lease Payments + Estimated Excess Mileage Cost. Note: This calculation simplifies the residual value aspect, focusing on the cost of rental. You do not own the car at the end.
Buying Costs Calculation:
Buying a car means you own it. Your costs involve the purchase price, loan interest, maintenance, insurance, and the eventual resale value.
Loan Amount: Car Purchase Price – Purchase Down Payment
Monthly Loan Payment: This is calculated using the standard auto loan payment formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1], where:
n = Total Number of Payments (Loan Term in Years * 12)
Total Loan Payments: Monthly Loan Payment * Total Number of Payments
Estimated Total Cost of Buying (before resale): Total Loan Payments + Purchase Down Payment + (Purchase Annual Maintenance * Loan Term in Years) + (Purchase Annual Insurance * Loan Term in Years)
Net Cost of Buying: Estimated Total Cost of Buying (before resale) – Estimated Resale Value
When Leasing Might Be Better:
You prefer driving a new car every few years.
You drive a predictable number of miles annually, within the lease allowance.
You want lower monthly payments compared to financing a purchase.
You don't want the hassle of selling or trading in a car.
You don't want to worry about unexpected repair costs (often covered under warranty).
When Buying Might Be Better:
You plan to keep your car for a long time (beyond the typical lease term).
You drive a lot of miles, exceeding typical lease allowances.
You want to customize your vehicle.
You want to build equity and own an asset (even if depreciating).
You want unlimited mileage without penalty.
You're comfortable with potential maintenance costs after the warranty expires.
This calculator provides an estimate. Always review the specific terms and conditions of any lease or purchase agreement, including all fees, interest rates, and mileage restrictions, before making a decision.
function calculateLoanPayment(principal, annualRate, years) {
var monthlyRate = annualRate / 100 / 12;
var numberOfMonths = years * 12;
var monthlyPayment = principal * (monthlyRate * Math.pow(1 + monthlyRate, numberOfMonths)) / (Math.pow(1 + monthlyRate, numberOfMonths) – 1);
return isNaN(monthlyPayment) ? 0 : monthlyPayment;
}
function calculateCosts() {
var leaseTermMonths = parseFloat(document.getElementById("leaseTermMonths").value);
var leaseMonthlyPayment = parseFloat(document.getElementById("leaseMonthlyPayment").value);
var leaseMileageAllowance = parseFloat(document.getElementById("leaseMileageAllowance").value);
var leaseExcessMileageCharge = parseFloat(document.getElementById("leaseExcessMileageCharge").value);
var leaseDownPayment = parseFloat(document.getElementById("leaseDownPayment").value);
var leaseResidualValue = parseFloat(document.getElementById("leaseResidualValue").value); // Not directly used in cost, but good for context
var carPrice = parseFloat(document.getElementById("carPrice").value);
var purchaseDownPayment = parseFloat(document.getElementById("purchaseDownPayment").value);
var loanInterestRate = parseFloat(document.getElementById("loanInterestRate").value);
var loanTermYears = parseFloat(document.getElementById("loanTermYears").value);
var purchaseEstimatedResaleValue = parseFloat(document.getElementById("purchaseEstimatedResaleValue").value);
var purchaseAnnualMaintenance = parseFloat(document.getElementById("purchaseAnnualMaintenance").value);
var purchaseAnnualInsurance = parseFloat(document.getElementById("purchaseAnnualInsurance").value);
var purchaseAnnualMileage = parseFloat(document.getElementById("purchaseAnnualMileage").value);
var resultDiv = document.getElementById("comparisonResult");
resultDiv.innerHTML = ""; // Clear previous results
// Input validation
if (isNaN(leaseTermMonths) || isNaN(leaseMonthlyPayment) || isNaN(leaseMileageAllowance) || isNaN(leaseExcessMileageCharge) || isNaN(leaseDownPayment) ||
isNaN(carPrice) || isNaN(purchaseDownPayment) || isNaN(loanInterestRate) || isNaN(loanTermYears) || isNaN(purchaseEstimatedResaleValue) ||
isNaN(purchaseAnnualMaintenance) || isNaN(purchaseAnnualInsurance) || isNaN(purchaseAnnualMileage)) {
resultDiv.innerHTML = "Please enter valid numbers for all fields.";
return;
}
// — Lease Cost Calculation —
var totalLeasePayments = (leaseMonthlyPayment * leaseTermMonths) + leaseDownPayment;
var totalLeaseMileageAllowed = (leaseTermMonths / 12) * leaseMileageAllowance;
var totalMilesDrivenLease = purchaseAnnualMileage * (leaseTermMonths / 12); // Assumes same driving as purchase for comparison
var excessMileageCostLease = 0;
if (totalMilesDrivenLease > totalLeaseMileageAllowed) {
excessMileageCostLease = (totalMilesDrivenLease – totalLeaseMileageAllowed) * leaseExcessMileageCharge;
}
var estimatedTotalLeaseCost = totalLeasePayments + excessMileageCostLease;
// — Purchase Cost Calculation —
var loanAmount = carPrice – purchaseDownPayment;
var monthlyLoanPayment = calculateLoanPayment(loanAmount, loanInterestRate, loanTermYears);
var totalLoanPayments = monthlyLoanPayment * (loanTermYears * 12);
var totalPurchaseCostBeforeResale = totalLoanPayments + purchaseDownPayment +
(purchaseAnnualMaintenance * loanTermYears) +
(purchaseAnnualInsurance * loanTermYears);
var netCostOfBuying = totalPurchaseCostBeforeResale – purchaseEstimatedResaleValue;
// — Comparison —
var comparisonMessage = "";
if (estimatedTotalLeaseCost < netCostOfBuying) {
comparisonMessage = "Leasing appears to be more cost-effective.";
} else if (netCostOfBuying < estimatedTotalLeaseCost) {
comparisonMessage = "Buying appears to be more cost-effective.";
} else {
comparisonMessage = "Leasing and buying costs are estimated to be very similar.";
}
resultDiv.innerHTML = "Estimated Total Lease Cost: $" + estimatedTotalLeaseCost.toFixed(2) +
"Estimated Net Cost of Buying: $" + netCostOfBuying.toFixed(2) +
"" + comparisonMessage;
}