Leasing vs. Financing


by Matt Moreman 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.




Matt Moreman
Matt Moreman

Author

I don't mean to make light of this, but I am medically diagnosed with Obsessive Compulsive Disorder. Due to being afflicted, uniquely organized, and highly focused, The Garage tends to become my place of sanity. It is the anchor of my obsession, but I also have a passion for Cars, Finance, and Electronics. Stay tuned as I transplant what is in my head into the Obsessed Blog.



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