Auto Lease or Buy Calculator
This calculator will provide you with a detailed breakdown of the costs associated with leasing a car versus purchasing a car with an auto loan. Under both the “lease” and “loan” columns, enter the required information. This information includes your prospective purchase’s price, the sales tax rate, and fees, as well as your down payment in cash, your trade-in allowance, and any applicable rebates. Then input the loan term in months, your monthly payment, security deposit (for lease only), the estimated resale value, and the annual savings rate. Push CALCULATE, and you’ll instantly see a side-by-side comparison of the costs associated with leasing versus buying. Hopefully, you’ll discover the most cost-effective approach to getting yourself into a new car.
You may also want to try our leasing calculator.
Current Auto Loan Rates
The following table shows currently available automotive loan rates in for new and used cars. Adjust your loan inputs to match your scenario and see what rates you qualify for.
Owning vs Leasing: Which is Better?
While most people would generally prefer to own an automobile rather than renting one, this isn't the ideal situation for everyone. Some people don't have the money or credit required to pay for the purchase of a vehicle or obtain an auto loan. Owning and operating a vehicle is expensive, and in addition to the cost of maintaining and fueling your preferred mode of transportation over the long haul, the major cost of a monthly loan payment could make the prospect impossible. That said, most of us need to get from point A to point B on a daily basis in order to work. And taking public transportation might not be terribly convenient if you're facing a long commute and/or you have a family to tote around town.
Luckily, there is an alternative. But you first need to think long and hard about the pros and cons of buying a car versus leasing one. You'll have to address your particular situation in order to determine which course of action is going to be the most advantageous. Here are some questions to ask before you make a decision.
What is your monthly budget?
Cost is a major factor in the debate between purchasing and renting a vehicle. And the amount of money in your budget could be the determining factor. When you buy an automobile, you're taking out a loan for the full price, minus your down payment or the value of a trade-in. This will likely total tens of thousands of dollars, broken up into monthly payments (with interest) to be paid over the course of, say, five years. You'll also pay tax on the full amount of the vehicle. With a lease agreement, you'll end up paying significantly less on a monthly basis. This is because you're only paying out the projected loss in value over the course of the contract, say two years, and the taxes associated with that amount. So if you don't have a lot to spare from your monthly budget, consider the benefits of renting.
How much of a down payment can you muster?
Again, you're going to need more money up front in order to purchase a vehicle. The prospect of renting generally requires that you pay only the first month up front, as well as associated fees. Purchasing a vehicle, on the other hand, will call for a larger down payment if you want to secure an auto loan and keep your monthly payments low. So if you're lacking the cash or a current car for trade-in value, buying might not be your best move.
What type of vehicle are you interested in?
If you're the type that likes luxury vehicles, but you're living the champagne and caviar lifestyle on a soda and saltines budget, you might discover that you can afford the finer automobiles you prefer by renting a vehicle rather than buying one. With monthly bills that could be half or less what you'll pay for purchase, that Beamer or MB could suddenly be within your reach.
How often do you plan to upgrade?
Some people hang onto their automobiles for dozens of years and drive them hundreds of thousands of miles. Others like to get into a new vehicle before the bumper-to-bumper warranty expires. If you fall into the latter camp, buying a vehicle may not be the right choice for you. Those who are handy with repairs can save some money with a DIY attitude where automotive maintenance is concerned. But if you'd rather trade up well before the 100,000 mile mark and prior to any issues that could fall outside the warranty period (and result in out-of-pocket expenses), opting for a rental contact is probably a better choice.
Are you interested in customization?
Whether you're leasing a vehicle or paying down an auto loan, chances are that you won't be allowed to customize your paint job, slam your vehicle, or otherwise significantly modify it. But if you've got your heart set on a Foose-like overhaul for your personal vehicle, buying is definitely the way to go. Eventually, you're going to hold the title to your transportation, at which point you have carte blanche to modify it as you see fit. This isn't something you'll ever be able to do with a vehicle you've got on limited loan from the dealership.
What are your driving habits?
You probably don't like to admit that you drive like a speed demon, and you almost certainly abhor the commute that puts 100 miles on your vehicle daily. But it's imperative that you address these concerns when deciding between buying and renting a vehicle. Your driving habits could play a major role in your ultimate choice. The reason is that there are strict limitations and rules associated with leases. For one thing, you'll face mileage restrictions. In most cases, you'll be penalized for exceeding 15,000 miles per year. So if you put a lot of miles on your vehicle, it could add up to a hefty fee.
But there are also penalties associated with wear and tear that goes beyond the norm, as well as outright damage. If you're hard on your vehicles or you engage in unsafe driving practices, you could end up paying for it when your contract expires and you return your vehicle. Even with gap insurance in place to cover the possibility of accidents that turn your auto into scrap metal, you might still be on the hook for damages not covered by insurance.
Is it for business or personal use?
Taxation can be a major expense. But if you're looking for a dedicated business vehicle, you'll find that leasing comes with some extra benefits, namely that you can write off the full amount of your monthly payments. In most cases, this is preferable to futzing around with depreciation value and so forth on a vehicle you've purchased. Buying a car isn't right for every consumer or every situation, so it's important to understand the pros and cons of buying versus renting before you make your choice.
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