How will you choose between a lease and purchase option to get a car? This calculator is deliberate to analyze both the options to suggest you what should be your decision. After you input the required variables, it will put the numbers together and confirm you the net cost of purchasing the auto as well as the net cost of taking lease. The exclusive reports will summarize the outcomes of the entire calculation.
Total price for the auto purchase. This is what you pay after deducting the manufacturer’s rebate.
Amount of cash down paid for the auto purchase. It is termed as capital reduction in case of lease contract. Whatever the term is, this amount reduces the required amount of financing.
Sales tax rate
Tax rate charged on the auto purchase. This rate is applied on the total sale amount if you are purchasing the auto, whereas, it is combined with each periodic payment in case of lease contract.
Investment rate of return
Your expected rate of return from investment. This rate reflects the return you would realize by forgoing the cash down or security deposit and investing that money in the market. But this is only your expectations. And the type of investment you choose has an effect on the actual rate of return. For example, the average annual compounded rate of return for the 10 years S&P 500 ended on 2012 was about 7.10%.s Bank or savings institutions can pay as little as 0.25% to 1% on savings accounts. It is important to know that future rates of return cannot be foreseen and investments that pay higher rates of return have a higher risk and are more volatile.
Loan term in months
Length of term for this auto loan. This should be entered in months. If your entered term length is longer than the terms of lease, the calculator will make the comparison up to the lease expiration time and use the remaining terms to calculate the remaining loan balance.
Loan interest rate
Yearly rate of interest for the auto loan.
Title transfer fees, licensing fees, and other costs that was included so far. This should only include costs payable at the time of purchase.
The rate by which the purchased auto will lose its value every year. This depreciation rate can vary from 10% to 20% based on the quality, maintenance, and frequency of using the car.
Market value of vehicle
This is the value of the purchased auto when the lease term is over.
Net cost of buying
The cost of purchasing the motor vehicle. This is calculated by deducting the market value of the equipment from the total of upfront costs, lost interest, and loan balance outstanding at the time of lease expiration.The amount of lost interest is the opportunity cost of forgoing interest income from investment because of paying down payment and other related fees.
Lease term in months
Term length of the auto lease contract.
Lease interest rate
Interest rate charged annually for the auto lease.
Title transfer fees, licensing fees, and other costs incurred at the end of lease contract should be added here. However, this field should not be used to adjust the cash down or capital reduction.
Percentage rate that is indicating the remaining value of the car after the lease term is over. A higher residual percentage signifies a lower amount of lease payment.
Amount of money that is deposited at the starting of the lease contract. Partial or full amount of this security deposit is refunded after the lease contract ends. ACalculator assumes that the deposit is refunded completely.
Net cost of lease
The net cost of leasing the motor vehicle. This is calculated by adding total upfront fees, interest lost for entering the lease (opportunity cost), and total lease payments.The amount of lost interest is the opportunity cost of forgoing interest income from investment because of paying down payment and other related fees.