Using the calculator at www.mindyourfinances.com/calculators/lease-buy, determine whether it is better to lease or buy a vehicle. Assume the purchase price of the car is $30,000, you will make a $2,000 down payment, the sales tax rate in your state is 6%, and your investment rate of return is 10%.
The term of the loan will be 60 months with an interest rate of 7%, no other fees, and an annual depreciation rate of 20%. The term of the lease will be 24 months with an interest rate of 7%, other fees totaling $150, a residual percentage of 50%, and a security deposit of $1,000.
Based strictly on the monthly payments, is it better to buy or lease? What is the monthly difference in cost between the two?