Car leasing is a controversial topic in personal finance. Some say that leasing is a financial dead end – you pay for years for an asset that you will never own. Others consider it foolish to buy something that depreciates quickly.
But major financial decisions should be based on numbers, not assumptions. Our rental and purchase calculator will give you a realistic comparison of how much you end up paying for car rental or car financing.
How to use the rental and purchase calculator
First, fill in the basic information about the car you are buying. Enter the purchase price, the amount of cash you can raise for the down payment, and your state’s sales tax rate.
Under Buy optionchoose the term of the loan, the interest rate you will pay, and any additional fees you may pay.
Under Rental optionfill in the same fields, plus a deposit.
Results in Summary The section will show you the total cost of buying and renting over the next ten years. The purchase option assumes that you keep the same car for ten years; the rental option assumes that you rent a new car at the end of each lease period.
The calculator assumes the same depreciation, registration fees and fuel costs for both purchase and rental. High mileage on a rental car will result in excessive charges, but high mileage on your own car will speed up depreciation. Therefore, high mileage will equally affect both vehicles and is therefore not taken into account in our calculations.
We assumed that with leasing you could get a 3% ROI (at the most conservative estimate) with the extra money you would have spent on buying a car. We also assumed 15% depreciation on your car per year and 60% residual interest (the value of your car at the end of the lease).
Personal finance is personal, as we like to say here. We can’t tell you if you should buy or rent a car, but this calculator can give you an accurate idea of the costs associated with each.