Which Financial Path is Right for Your New Vehicle?
Deciding whether to lease or buy a car involves more than just looking at the monthly payment. This calculator compares the long-term financial implications of financing a car versus leasing one. While leasing offers lower monthly out-of-pocket costs, buying builds equity. Use the inputs below to see the breakdown of total costs, monthly commitments, and the net difference over your chosen term.
Option 1: Buying
Monthly Payment: $0
Total Interest: $0
Total Tax: $0
Total Out-of-Pocket: $0
Estimated Equity: $0
Option 2: Leasing
Monthly Payment: $0
Monthly Rent Charge: $0
Monthly Tax: $0
Total Out-of-Pocket: $0
Estimated Equity: $0
Net Financial Impact After 36 Months
Understanding the Math: Buy vs. Lease
When you buy a car, you are financing the entire purchase price (plus tax and interest). Once the loan is paid off, you own the vehicle—an asset with a specific market value (the residual value). The "cost" of buying is effectively the total money paid minus the value of the car at the end of the term.
When you lease a car, you are essentially paying for the car's depreciation during the time you drive it, plus a "rent charge" (the interest) and taxes. Since you aren't paying for the entire value of the car, your monthly payments are usually significantly lower, but you have zero equity at the end of the term.
Key Terms Used in this Calculator
Residual Value: The estimated value of the car at the end of the term. Higher residual values lead to lower lease payments.
Money Factor (Rent Charge): In leasing, interest is often expressed as a money factor. We convert your APR into a money factor by dividing by 2400.
Equity: The value you own. When buying, this is the car's market value. When leasing, this is zero because you return the car.
Example Comparison
Imagine a $40,000 SUV with a 36-month term and 6% interest.
• Buying: With $5,000 down, your monthly payment might be around $1,063. After 3 years, you've paid roughly $43,268 total, but you own a car worth $24,000. Your "net cost" is $19,268.
• Leasing: Your monthly payment might be $580. After 3 years, you've paid roughly $25,880. Your "net cost" is the full $25,880 because you own nothing.
function calculateLeaseVsBuy() {
// Inputs
var price = parseFloat(document.getElementById('vehiclePrice').value);
var down = parseFloat(document.getElementById('downPayment').value);
var apr = parseFloat(document.getElementById('interestRate').value);
var months = parseInt(document.getElementById('termMonths').value);
var resPer = parseFloat(document.getElementById('residualPercent').value);
var taxRate = parseFloat(document.getElementById('salesTax').value) / 100;
if (isNaN(price) || isNaN(down) || isNaN(apr) || isNaN(months) || isNaN(resPer)) {
alert("Please fill in all fields with valid numbers.");
return;
}
// — BUYING CALCULATIONS —
var loanAmount = price – down;
var monthlyInt = (apr / 100) / 12;
var buyMonthly = 0;
if (monthlyInt > 0) {
buyMonthly = loanAmount * (monthlyInt * Math.pow(1 + monthlyInt, months)) / (Math.pow(1 + monthlyInt, months) – 1);
} else {
buyMonthly = loanAmount / months;
}
var totalTaxBuy = price * taxRate;
var totalPaymentsBuy = buyMonthly * months;
var totalInterestBuy = totalPaymentsBuy – loanAmount;
var totalOutBuy = totalPaymentsBuy + down + totalTaxBuy;
var residualValue = price * (resPer / 100);
var netCostBuy = totalOutBuy – residualValue;
// — LEASING CALCULATIONS —
var capCost = price – down;
var residualAmt = price * (resPer / 100);
var depreciation = capCost – residualAmt;
var monthlyDepreciation = depreciation / months;
// Rent Charge = (Net Cap Cost + Residual) * Money Factor
// Money Factor = APR / 2400
var moneyFactor = (apr / 100) / 24;
var monthlyRent = (capCost + residualAmt) * moneyFactor;
var baseLeasePayment = monthlyDepreciation + monthlyRent;
var leaseTaxMonthly = baseLeasePayment * taxRate;
var totalLeaseMonthly = baseLeasePayment + leaseTaxMonthly;
var totalOutLease = (totalLeaseMonthly * months) + down;
var netCostLease = totalOutLease; // No equity in lease
// Display Results
document.getElementById('resultsContainer').style.display = 'block';
document.getElementById('buyMonthly').innerText = '$' + buyMonthly.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('buyInterest').innerText = '$' + totalInterestBuy.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('buyTax').innerText = '$' + totalTaxBuy.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('buyTotalOut').innerText = '$' + totalOutBuy.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('buyEquity').innerText = '$' + residualValue.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('leaseMonthly').innerText = '$' + totalLeaseMonthly.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('leaseRent').innerText = '$' + monthlyRent.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('leaseTax').innerText = '$' + leaseTaxMonthly.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('leaseTotalOut').innerText = '$' + totalOutLease.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('summaryTerm').innerText = months;
var diff = Math.abs(netCostBuy – netCostLease);
if (netCostBuy < netCostLease) {
document.getElementById('comparisonSummary').innerText = "Buying is $" + diff.toLocaleString(undefined, {maximumFractionDigits: 0}) + " cheaper overall";
document.getElementById('explanationText').innerText = "Because you own the car's residual value at the end, your total net cost is lower when buying.";
} else {
document.getElementById('comparisonSummary').innerText = "Leasing is $" + diff.toLocaleString(undefined, {maximumFractionDigits: 0}) + " cheaper overall";
document.getElementById('explanationText').innerText = "In this scenario, the lower monthly payments and taxes of leasing outweigh the equity gained by buying.";
}
}