Enrichment · Passion Projects · Vehicles

Lease it or buy it:
compare the same
three years.

Type the lease offer and the loan for the same car. The calculator adds up every lease dollar, then counts the loan payments and subtracts the car you would still own, so the two answers are on equal terms.

Compare the offersWhat you get

The lease or buy calculator

The worked example is a made-up offer on a $32,000 small SUV. Nothing you type leaves this browser.

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What you get

Enrichment · Passion ProjectsFree

What you finish with
The net cost of leasing and of buying over the lease term, the difference, the loan payment, interest and balance, and a side-by-side table. It prints as a summary and downloads as a spreadsheet.
Who it is for
Families and young adults shopping for a car, personal finance and consumer math classes, and anyone holding a lease quote and a loan quote.
Format
Browser calculator for a phone, tablet or computer, by touch or keyboard. Prints a summary; downloads a spreadsheet (.csv); export and import a file.
Access
Free. No account, no sign-in and nothing to install. Everything you type stays in this browser; nothing is sent to Caveat.
Where it lives
The Passion Projects space in Caveat Enrichment.
Support
Questions, a correction or a request: team@caveatacademic.com.

How to use it

  1. Type the lease payment, months and amount due at signing from the quote.
  2. Add the return fee, mileage allowance and extra-mile charge.
  3. Type the price, down payment, APR and loan length for buying.
  4. Estimate the car’s value at the end of the lease term.
  5. Read which costs less, then try a lower value.

Compare the offers

How the two are compared

Same car, same months, equity counted.

The worked example: a $32,000 small SUV over three yearsLease total$18,3992,500 + 36 × 389 + feesBuy paid$23,9124,000 + 36 × 553.11Equity$6,194$18,560 − $12,366 owedBuy, net$17,718paid − equityThe worked example: a $32,000 small SUV over three yearsLease total$18,3992,500 + 36 × 389 + feesBuy paid$23,9124,000 + 36 × 553.11Equity$6,194$18,560 − $12,366 owedBuy, net$17,718paid − equity
The fair comparison counts what you still own at the end, not just what you paid.

Counting equity

A lease is a long rental: at the end you hand back the car. A loan ends with a car you own, even if you still owe some of the loan. Comparing payment to payment hides that. The calculator values the car at the end of the lease term, takes off the loan balance and subtracts that equity from what you paid.

What moves the answer

Three things decide most comparisons: how fast the car loses value, the loan’s interest rate, and how much you drive. Driving well past the allowance makes leasing expensive quickly, and keeping a car for many years after the loan is paid off usually favours buying. Check the lease’s money factor and residual on the contract; the Federal Reserve’s consumer guide explains both.

Sources

  1. Consumer Financial Protection Bureau. Auto loans: what to know, and understanding loan terms (consumerfinance.gov).
  2. Board of Governors of the Federal Reserve System. Keys to Vehicle Leasing: a consumer guide (federalreserve.gov).
  3. Federal Trade Commission. Financing or leasing a car (consumer.ftc.gov).
  4. U.S. Bureau of Labor Statistics. Consumer Price Index for new and used vehicles (bls.gov).

The worked example is made up, including the offer and the future value. Taxes, insurance and maintenance are left out. Your entries stay in this browser. Support: team@caveatacademic.com.