Buy versus Lease Analysis: You should determine the NPV (net present value) and the purchase price for the car by using a calculator between the two methods of auto financing. You can also do this with a fully-functional spreadsheet from an Excel template. It’s not easy to say that one method is better than the other because it depends on the specifics of each situation.
If you need auto assets for your business, then a you might want the lease option versus an individual who needs a car for transportation. An NPV analysis will help you evaluate and compare the cost to determine which one is cheaper. However, if you are planning to own it longer, then you should buy.
Most businesses prefer to lease because the analysis will reveal that its cheaper with a tax-deductible option, and they get a new car every two years, or whatever the agreement is, which improves in reliable transportation and maintenance.
If you use a spreadsheet to compare the financial options, you will can see that it’s always best for an individual to own the car. One thing to remember is that leasing is not renting as many people seem to think. It finances the use of a vehicle. A person who decides to buy it with a loan is only financing the purchase.
Each situation is different, but if you have a calculator or the Excel program on your computer, which has a template for financial comparisons, you will be able to decide after evaluating the expenses, and which method will benefit you the most.
For some people, car ownership versus low up-front auto cost with a down payment is good. It might be better for others to pay off your vehicle and be debt-free. A NPV calculator Excel spreadsheet will show you that a lease has lower payments versus someone who is buying.