Compare the monthly payments and total cost of ownership between leasing and financing a vehicle.
Financing (Buying)
Monthly Payment:
Total Interest:
Total Cost:
Equity after 3 years
Leasing
Monthly Payment:
Total Lease Cost:
Rent Charge:
Cash Flow Savings
function calculateComparison() {
var carPrice = parseFloat(document.getElementById('carPrice').value);
var downPayment = parseFloat(document.getElementById('downPayment').value);
var interestRate = parseFloat(document.getElementById('interestRate').value) / 100 / 12;
var loanTerm = parseInt(document.getElementById('loanTerm').value);
var leaseTerm = parseInt(document.getElementById('leaseTerm').value);
var residualPercent = parseFloat(document.getElementById('residualValue').value) / 100;
var moneyFactor = parseFloat(document.getElementById('moneyFactor').value);
var taxRate = parseFloat(document.getElementById('taxRate').value) / 100;
if (isNaN(carPrice) || isNaN(downPayment) || carPrice <= 0) {
alert("Please enter valid car price and down payment.");
return;
}
// Financing Calculation
var loanAmount = carPrice – downPayment;
var buyMonthly = 0;
if (interestRate === 0) {
buyMonthly = loanAmount / loanTerm;
} else {
buyMonthly = loanAmount * (interestRate * Math.pow(1 + interestRate, loanTerm)) / (Math.pow(1 + interestRate, loanTerm) – 1);
}
var buyTotalCost = (buyMonthly * loanTerm) + downPayment;
var buyTotalInterest = (buyMonthly * loanTerm) – loanAmount;
// Estimate Equity (Value after 3 years – remaining loan)
// Simple straight-line depreciation for equity estimate
var estimatedValueAfter3Years = carPrice * residualPercent;
var buyEquity = estimatedValueAfter3Years;
// Leasing Calculation
var residualValue = carPrice * residualPercent;
var capCost = carPrice – downPayment;
var depreciationFee = (capCost – residualValue) / leaseTerm;
var financeFee = (capCost + residualValue) * moneyFactor;
var leaseMonthlyBase = depreciationFee + financeFee;
var leaseMonthlyWithTax = leaseMonthlyBase * (1 + taxRate);
var leaseTotalCost = (leaseMonthlyWithTax * leaseTerm) + downPayment;
// Display Results
document.getElementById('results').style.display = 'block';
document.getElementById('buyMonthly').innerText = '$' + buyMonthly.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('buyInterest').innerText = '$' + buyTotalInterest.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('buyTotal').innerText = '$' + buyTotalCost.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('buyEquity').innerText = '$' + buyEquity.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0});
document.getElementById('leaseMonthly').innerText = '$' + leaseMonthlyWithTax.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('leaseTotal').innerText = '$' + leaseTotalCost.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('leaseRent').innerText = '$' + (financeFee * leaseTerm).toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
var monthlyDiff = buyMonthly – leaseMonthlyWithTax;
document.getElementById('monthlySavings').innerText = '$' + monthlyDiff.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}) + "/mo";
}
Understanding the Lease vs. Buy Dilemma
Choosing between leasing and buying a car is one of the most significant financial decisions for any household. While both options get you behind the wheel of a new vehicle, the long-term financial implications differ drastically. Our Lease vs. Buy Calculator is designed to help you visualize these differences by looking at monthly cash flow, total interest, and projected equity.
How the Calculation Works
To provide an accurate comparison, the calculator uses several key metrics:
Money Factor: This is essentially the interest rate for a lease. To compare it to an APR, multiply the money factor by 2400. For example, a 0.0025 money factor is roughly equal to a 6% APR.
Residual Value: This is what the leasing company predicts the car will be worth at the end of your lease term. A higher residual value usually leads to lower monthly lease payments.
Equity: When you buy a car, you own an asset. After the loan is paid off, the "equity" is the market value of that vehicle. In leasing, you have zero equity; you return the car and start over.
When Buying is Better
Buying (financing) is generally the better financial move if you plan to keep the vehicle for more than 5 years. Once the loan is paid off, your monthly expense drops to zero (excluding maintenance). Over a 10-year period, owning a car is significantly cheaper than leasing three different cars in succession.
When Leasing Makes Sense
Leasing is attractive if you prioritize cash flow and want to drive a new car every 2-3 years. Since you are only paying for the vehicle's depreciation during the time you use it, your monthly payments are typically 30% to 60% lower than financing the same vehicle. It is also beneficial for business owners who may be able to deduct lease payments as a business expense.
Real-World Example
Imagine a $40,000 SUV. If you finance it for 60 months at 5% interest with $5,000 down, your payment might be around $660/month. If you lease the same car for 36 months with a 60% residual, your payment could be as low as $420/month.
While the lease saves you $240 every month in cash flow, at the end of 5 years, the buyer owns a car worth approximately $18,000, while the lessee has spent thousands on payments and has no vehicle to show for it.