1. What is the Lease Vs Buy Calculator?

The Bankrate Lease Vs Buy Calculator helps you compare the net costs of leasing versus buying an asset (typically a vehicle). It calculates the true cost of each option by factoring in the estimated resale value.

2. How Does the Calculator Work?

The calculator uses these simple formulas:

Where:

• Total Lease Payments — Sum of all lease payments over the term
• Total Purchase Payments — Total cost if purchasing (including down payment, loan payments, etc.)
• Resale Value — Estimated value of the asset at end of lease term or ownership period

Explanation: The calculator subtracts the estimated future resale value from your total payments to determine the true net cost of each option.

3. Importance of Lease vs Buy Comparison

Details: Comparing lease vs buy options helps you make informed financial decisions about major purchases, particularly vehicles. Leasing typically offers lower monthly payments but no equity at the end, while buying builds equity but requires higher monthly payments.

4. Using the Calculator

Tips: Enter all values in dollars. Be realistic about the estimated resale value - research similar assets to get accurate estimates. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Which is better, leasing or buying?
A: It depends on your financial situation, driving habits, and preferences. Leasing offers lower payments and always driving a newer vehicle, while buying builds equity and has no mileage restrictions.

Q2: What factors should I consider beyond cost?
A: Consider mileage needs, maintenance costs, how long you plan to keep the vehicle, and your preference for always having the latest features vs building equity.

Q3: How accurate is the resale value estimate?
A: Resale values are estimates. For more accuracy, consult resources like Kelley Blue Book or Edmunds for projected depreciation rates.

Q4: Are there tax implications to consider?
A: Yes, leasing may offer different tax advantages than buying, especially for business use. Consult a tax professional for your specific situation.

Q5: Does this calculator include all costs?
A: This calculator focuses on the major financial components. You should also consider insurance differences, maintenance costs, and potential lease-end fees.