Deciding whether to lease or buy a new vehicle is a significant financial decision. Both options have distinct advantages and disadvantages, and the best choice for you depends on your driving habits, financial situation, and long-term goals. This calculator helps you compare the estimated total costs over a specified period, factoring in various expenses.
Buying a Vehicle
When you buy a vehicle, you finance a portion of its total price (minus your down payment) through a loan. Over the loan term, you make monthly payments that include principal and interest. Once the loan is paid off, you own the vehicle outright. You are responsible for all maintenance and repair costs. The primary benefit is ownership and the ability to keep the vehicle for as long as you want, accumulating equity as you pay down the loan and the vehicle depreciates.
Key Factors in Buying:
Vehicle Price: The initial cost of the car.
Down Payment: The upfront cash paid, reducing the loan amount.
Loan Term: The duration of the financing agreement (in months).
Interest Rate: The annual percentage charged on the loan.
Estimated Resale Value: What the car might be worth after the period you are comparing (e.g., after the typical lease term). This is your equity.
Maintenance/Repair Costs: Expenses incurred for upkeep, which typically increase as the car ages.
Leasing a Vehicle
Leasing is essentially a long-term rental agreement. You pay for the depreciation of the vehicle over the lease term, plus interest (often called a money factor) and fees. Lease terms typically range from 24 to 48 months. At the end of the lease, you have a few options: return the car, purchase it for its residual value, or lease a new vehicle. Leases often come with lower monthly payments compared to loan payments for the same vehicle because you're only paying for the portion of the car's value you use, not its full price.
Key Factors in Leasing:
Vehicle Price: Used to calculate the depreciation.
Down Payment (Cap Reduction): Reduces the capitalized cost, lowering your monthly payments.
Lease Term: The duration of the lease contract (in months).
Money Factor: The lease equivalent of an interest rate, often expressed as a decimal.
Residual Value: The estimated value of the car at the end of the lease term, set by the leasing company.
Mileage Limits: Leases have strict annual mileage caps. Exceeding these limits results in significant per-mile overage fees.
Maintenance: Some leases include basic maintenance, while others do not. This calculator assumes you'll cover these costs separately for comparison.
How the Calculator Works
The calculator estimates the total cost of ownership for both buying and leasing over your specified comparison period (determined by the loan/lease term you input). It considers:
Buying Cost: The sum of all loan payments (principal + interest) plus estimated maintenance and repairs, minus the estimated resale value of the car at the end of the term.
Leasing Cost: The sum of all lease payments (depreciation + finance charge + fees) plus estimated maintenance and repairs, plus any potential mileage overage fees. Note: Fees and sales tax on monthly payments can vary significantly and are not explicitly detailed in this simplified model, but the core comparison of depreciation, interest, and mileage is provided.
The calculator then compares the total costs and your estimated monthly outlay to help you determine which option might be more financially advantageous for you.
Example Scenario
Let's say you're looking at a car priced at $30,000. You plan to keep it for 3 years (36 months).
Buying: You put down $3,000. You finance $27,000 at 5.5% APR for 36 months. You estimate the car will be worth $17,000 after 3 years. You anticipate $600/year in maintenance.
Leasing: You put down $3,000 (capital cost reduction). The lease term is 36 months. The money factor is equivalent to 5.5% APR. The residual value is estimated at 55% of MSRP ($16,500). You drive 12,000 miles/year and the overage fee is $0.20/mile. You anticipate $600/year in maintenance.
The calculator will use these inputs to project the total cost of ownership for each scenario over those 36 months.
function calculateLeaseVsBuy() {
var vehiclePrice = parseFloat(document.getElementById("vehiclePrice").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var loanTermMonths = parseInt(document.getElementById("loanTermMonths").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var estimatedResaleValue = parseFloat(document.getElementById("estimatedResaleValue").value);
var annualMileage = parseInt(document.getElementById("annualMileage").value);
var mileageOverageFee = parseFloat(document.getElementById("mileageOverageFee").value);
var maintenanceCostsPerYear = parseFloat(document.getElementById("maintenanceCostsPerYear").value);
// Input validation
if (isNaN(vehiclePrice) || vehiclePrice <= 0 ||
isNaN(downPayment) || downPayment < 0 ||
isNaN(loanTermMonths) || loanTermMonths <= 0 ||
isNaN(interestRate) || interestRate < 0 ||
isNaN(estimatedResaleValue) || estimatedResaleValue < 0 ||
isNaN(annualMileage) || annualMileage < 0 ||
isNaN(mileageOverageFee) || mileageOverageFee < 0 ||
isNaN(maintenanceCostsPerYear) || maintenanceCostsPerYear < 0) {
document.getElementById("result").innerHTML = "
Error
Please enter valid positive numbers for all fields.";
return;
}
if (downPayment > vehiclePrice) {
document.getElementById("result").innerHTML = "
Error
Down payment cannot be greater than the vehicle price.";
return;
}
// — Calculations for Buying —
var loanAmount = vehiclePrice – downPayment;
var monthlyInterestRate = (interestRate / 100) / 12;
var buyMonthlyPayment = 0;
if (monthlyInterestRate > 0) {
buyMonthlyPayment = loanAmount * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, loanTermMonths)) / (Math.pow(1 + monthlyInterestRate, loanTermMonths) – 1);
} else {
buyMonthlyPayment = loanAmount / loanTermMonths;
}
var totalLoanPayments = buyMonthlyPayment * loanTermMonths;
var totalMaintenanceBuy = maintenanceCostsPerYear * (loanTermMonths / 12);
var totalBuyCost = totalLoanPayments + totalMaintenanceBuy – estimatedResaleValue;
// — Calculations for Leasing —
// Simplified lease calculation: focuses on depreciation and finance charge.
// Assumes lease payment = (Depreciation + Finance Charge) / Term + Sales Tax (not included here)
// Depreciation = (Vehicle Price – Residual Value) / Lease Term
// Finance Charge = (Loan Amount + Residual Value) * Money Factor * Term (simplified approximation)
var leaseTermMonths = loanTermMonths; // Use the same term for comparison
var residualValue = vehiclePrice * (1 – (interestRate / 100) / 2); // Very rough estimate of residual based on interest rate – real leases use fixed percentages. For simplicity, let's use a placeholder for a realistic residual.
// A more accurate residual is usually set by the leasing company, e.g., 55% of MSRP.
// We'll use the input `estimatedResaleValue` as a proxy for a typical residual value calculation base if it's lower than vehicle price.
var leaseResidualValue = Math.min(vehiclePrice * 0.7, estimatedResaleValue); // Use a reasonable percentage or the provided value if lower.
if (leaseResidualValue <= 0) leaseResidualValue = vehiclePrice * 0.4; // Default if calculation is problematic
var depreciation = (vehiclePrice – leaseResidualValue);
var moneyFactor = (interestRate / 100) / 2400; // Common conversion from APR to Money Factor
var financeCharge = (loanAmount + leaseResidualValue) * moneyFactor * leaseTermMonths; // Approximation
var leaseMonthlyPayment = (depreciation + financeCharge) / leaseTermMonths;
var totalLeasePayments = leaseMonthlyPayment * leaseTermMonths;
var totalMileageOverage = Math.max(0, (annualMileage * (loanTermMonths / 12)) – (annualMileage * (loanTermMonths/12))) * mileageOverageFee; // Assuming standard 12000 miles/year for example comparison of overage
var totalMaintenanceLease = maintenanceCostsPerYear * (loanTermMonths / 12); // Assuming same maintenance cost for fair comparison.
var totalLeaseCost = totalLeasePayments + financeCharge + totalMaintenanceLease + totalMileageOverage; // Finance charge is part of lease payment, but sometimes listed separately for clarity. Here, it's added to ensure it's accounted for beyond just depreciation.
// — Comparison —
var buyTotalCostFormatted = totalBuyCost.toFixed(2);
var leaseTotalCostFormatted = totalLeaseCost.toFixed(2);
var buyMonthlyPaymentFormatted = buyMonthlyPayment.toFixed(2);
var leaseMonthlyPaymentFormatted = leaseMonthlyPayment.toFixed(2);
var recommendation = "";
var monthlyComparison = "";
if (totalBuyCost < totalLeaseCost) {
recommendation = "Buying appears to be the more cost-effective option long-term.";
} else if (totalLeaseCost < totalBuyCost) {
recommendation = "Leasing appears to be the more cost-effective option long-term.";
} else {
recommendation = "The total costs for buying and leasing are approximately equal.";
}
if (buyMonthlyPayment < leaseMonthlyPayment) {
monthlyComparison = `Your estimated monthly payment for buying is $${buyMonthlyPaymentFormatted}, while leasing is estimated at $${leaseMonthlyPaymentFormatted}.`;
} else if (leaseMonthlyPayment < buyMonthlyPayment) {
monthlyComparison = `Your estimated monthly payment for leasing is $${leaseMonthlyPaymentFormatted}, while buying is estimated at $${buyMonthlyPaymentFormatted}.`;
} else {
monthlyComparison = `The estimated monthly payments for buying and leasing are approximately equal ($${buyMonthlyPaymentFormatted}).`;
}
document.getElementById("result").innerHTML = `
Comparison Results
Total Buy Cost (over ${loanTermMonths} months, after resale): $${buyTotalCostFormatted}
Total Lease Cost (over ${leaseTermMonths} months, includes fees/overage): $${leaseTotalCostFormatted}
${monthlyComparison}
${recommendation}
`;
}