1. What is the Buy or Lease Calculator?

The Consumer Reports Buy or Lease Calculator helps you compare the net cost of buying versus leasing a vehicle. It calculates the true cost of buying by accounting for up-front costs, lost interest, outstanding loans, and current market value.

2. How Does the Calculator Work?

The calculator uses the following equation:

Where:

• \( Net\_buy \) — Net cost of buying ($)
• \( U \) — Up front costs ($)
• \( LI \) — Lost interest ($)
• \( O \) — Outstanding loan ($)
• \( M \) — Market value ($)

Explanation: The equation sums all costs associated with buying (upfront payments, lost interest on those payments, and any remaining loan balance) then subtracts the current market value of the vehicle.

3. Importance of Buy vs Lease Calculation

Details: This calculation helps consumers make informed financial decisions when acquiring a vehicle by revealing the true cost of ownership compared to leasing options.

4. Using the Calculator

Tips: Enter all monetary values in dollars. Be sure to include all relevant costs and get an accurate estimate of your vehicle's current market value for best results.

5. Frequently Asked Questions (FAQ)

Q1: What counts as "up front costs"?
A: This includes down payment, taxes, title fees, and any other initial costs required to purchase the vehicle.

Q2: How do I calculate lost interest?
A: Estimate what you would have earned if you invested the up front costs instead (use current savings account rates or investment returns).

Q3: Where can I find my vehicle's market value?
A: Use reputable sources like Kelley Blue Book, Edmunds, or NADA Guides for current market valuations.

Q4: When does buying make more sense than leasing?
A: Typically when you plan to keep the vehicle long-term, drive high mileage, or want to build equity in the asset.

Q5: What other factors should I consider?
A: Maintenance costs, insurance differences, mileage restrictions (for leases), and personal preferences about vehicle ownership.