Leasing may be a good choice under certain circumstances. For example, if consumers use a vehicle in easy-wear situations only and for only the distance specified in the lease mileage terms. Also, it may pay to lease a car if the monthly payments for the lease are lower than those for a car loan to purchase that car. To calculate how to compare car loan payments with lease payments, follow these steps:
Determine through negotiation the lowest possible price so that it is no more than $200 over the dealer invoice.
Add sales tax and other up front costs applicable to purchasing and to leasing.
Add the relevant figures in each case to arrive at the gross purchase price and the capitalized cost for the lease.
Subtract from each of these figures the trade-in value if applicable.
Subtract from each of these figures the amount of the down payment.
Ideally, 20 percent of the figure calculated in the immediately preceding step should be put down for a purchase and nothing should be put down for a lease. This calculation gives the customer the net purchase price for buying and leasing.
Next add the respective finance charge for leasing and purchasing. For a lease this amount will be listed as a rent charge. This will give the total cost in purchasing and leasing.
Finally, divide each figure by the number of payments required.
After the comparative costs have been determined, customers need to remember that if they buy their cars, they will have a vehicle to sell the next time they enter the car market as consumers.