Leasing vs. Financing

Leasing vs. Financing

September 14, 2018

I was sitting at my computer crunching numbers on what to do about my wife’s Explorer Sport. The Lease is coming due in the not to distant future. As I was sitting at the computer crunching numbers, I thought I might as well share what I was thinking. Below are the calculations for Leasing vs. Financing a 2016 Chevy Tahoe LT. I’m not sure that’s the SUV we are going to get, but I wanted to be sure the numbers didn’t rule it out.

Lease

MSRP: $59,950
Residual Percentage at 15,000 Miles: 53%
Residual Value: $31,773.50
Percent off MSRP: 0.00%
Negotiated Price: $59,950
Down Payment: $0
Net Cap Cost (Neg. Price – Down Payment): $59,950
Depreciation: $28,216.50
Lease Term: 36 Months
Monthly Depreciation Payment: $783.79
Finance Cost = Net Cap Cost + Residual:  $91,723.50
Interest Rate (APR): .00100 X 2400 = 2.40%
Money Factor: 0.00100
Monthly Finance Fee: $91.72

Monthly Payment: $875.51
Sales Tax: 6%: $52.53

Total Monthly Payment: $928.04

Title, Registration, and Other Fees: ~$1,000
Drive-off (1st month’s payment + Fees):  ~$1,928.04

3 Year Cost of Lease:  = $34,409.44

 

This is much more complicated and really only applies to higher-end cars, but I think it’s still good to know.

Finance

 

Assume 2.49% APR 60/5yr. Month Loan

Purchase Price: $59,950 MSRP

Tax:  $3647

Title, Registration, and Other Fees: ~$1,000

Total Borrowed:  $64,596

Monthly Payment: $1,146.12

 

After 36 Months of Ownership

$3,470.62 Interest Paid

$37,789.84 Principal Paid

$26,806.16 Loan Balance

 

Assume Sell it at the end of 36 Months for $29,975.

We get $3,169.

$41,260.32 36 monthly payments.

 

3 Year Cost of Financing = $38,091.32

Just for comparison there is $218.08/month difference between leasing/financing.



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