Auto Lease vs. Buy Calculator
Leasing or buying a car is a complex decision. A car is a purchase where the value depreciates every year. Rarely are tax incentives associated with the purchase, except when purchasing an electric vehicle. Use this auto calculator to help analyze the financial impact of leasing versus buying a car.
When Should I Lease?
Leasing is attractive to people who want a smaller down payment and enjoy having new wheels every two to three years. You may be a good candidate for leasing if you drive no more than 15,000 miles a year and maintain a car in good condition. You may also be in favor of leasing if you generally drive the car for business purposes in order to take advantage of tax deductions. When you lease, you can deduct depreciation as well as the implicit financing costs. However, be aware that if your financial situation changes and you need to cancel your lease early, you will typically owe all remaining payments minus allowances for the depreciation that hasn’t happened yet.
What are Some Reasons to Buy?
A purchase allows you to either buy a new car impulsively when you have a cash windfall or to go some time without a car payment if you regularly keep cars for several years. Expect to put down at least 10% of the purchase as a down payment. Interest paid on loans to purchase a car is not deductible, but you may be eligible for dealer rebates that you might not get with a lease.