Auto Lease vs. Buy Calculator
Lease vs. Buy: Which Car Financing Option is Right For You?
Understanding the Key Differences
Leasing Pros
- Lower monthly payments
- Drive new cars more frequently
- Warranty covers most repairs
- No resale hassle
Buying Pros
- Ownership equity
- No mileage restrictions
- Can customize vehicle
- Lower long-term cost
When Leasing Makes Financial Sense
- Business use: Lease payments may be tax-deductible
- Short-term needs: If you only need a car for 2-3 years
- New car lovers: Want to drive a new car every few years
- Low mileage drivers: Stay under the annual mileage limit
Hidden Costs to Consider
Leasing Costs
- Acquisition fee ($500-$1,000)
- Disposition fee ($300-$500)
- Excess mileage charges ($0.15-$0.30/mile)
- Wear-and-tear charges
Buying Costs
- Depreciation (20-30% in first year)
- Maintenance after warranty
- Higher insurance costs
- Registration/taxes
Pro Tip: The average new car loses 60% of its value in the first 5 years. Leasing transfers this depreciation risk to the dealer, while buying means you absorb this loss.
Negotiation Strategies
Whether leasing or buying, you can negotiate these key terms:
- Capitalized Cost: The price of the car (negotiate this first)
- Money Factor: The lease interest rate (ask to see this)
- Residual Value: The car's projected value at lease end
- Mileage Allowance: Can often be increased for small monthly fee