John Farino, CPA - Lease vs. Purchase

Lease vs. Purchase Analysis

Please Input Terms of Leasing and Purchasing

[See Instructions Below]

Lease Information

Purchase Information

Monthly Rental Fee [Required] $

Retail Purchase Price [Required] $

Refundable
Non-refundable

Security Deposit $

Down Payment $

Lease Term in Months [Required]

Months

Loan Term in Months [Required
if item is to be financed]

Months

Residual Value (Buy Out) $

This item will be financed This item will NOT be financed

Last Month Payment in Advance $

If this item will not be financed, you may leave the
Down Payment and Loan Term fields blank.

Anticipated Extra Miles (Annual)

Current Interest Rate [Required]

Cost per Extra Mile (cents)

Current Interest Rate is used for calculating loan
payments and Present Values of Lease Costs

Instructions

Lease Information (lease terms)
Lease terms may vary. Enter information that is applicable.
Required fields are indicated as such. Other fields may be left blank.

1) Enter "Monthly Rental Fee". [Required]
2) Enter "Security Deposit". Many leases require an amount to be paid up front which may or may not be returned at the end of the lease term. Enter amount, if applicable, and indicate if it is refundable or non-refundable.
3) Enter the "Lease Term" in months. (i.e. 1 year = 12 months) [Required]
4) Enter the "Residual" or "Buy-Out Value". Many leases provide an option to purchase the leased item at the end of the lease period for a specified price.
5) Enter the "Last Month's Payment" made in "Advance". Many leases require the last month's lease payment to be made in advance.
6) Enter the "Anticipated Extra Mileage". One common provision in most auto leases is the requirement to pay a specified amount per mile when the vehicle is driven in excess of a specified number of miles per year. Enter here the excess miles you anticipate driving. (For example, the lease may specify that you are allowed to drive 15,000 miles per year free, and pay 10 cents per mile for each mile driven in excess of 15,000. If you anticipate driving 20,000 miles per year, enter 5,000 (20,000 - 15,000) in this field.)
7) Enter the "Cost Per Extra Mile" in cents (i.e. .10 = ten cents). Whole numbers will automatically be converted to decimals.

Purchase and Loan Information
Loan terms may vary. Enter information that is applicable.
Required fields are indicated as such. Other fields may be left blank.

8) Enter "Retail Purchase Price", the net retail price for which you can purchase this item. [Required]
9) If this item is to be financed, enter the "Down Payment".
10) If this item is to be financed, enter the "Loan Term" in months. [Required if item is to be financed]
11) Indicate whether or the purchase of this item is to be financed. [Default is "Item To Be Financed"]

12) Enter the "Current Interest Rate" as a decimal (i.e. 8.5% = .085). Whole numbers will automatically be converted to decimals. An entry is required even if you will not be financing this item. The current interest rate is used in calculating present values of lease payments. [Required]

When all input is complete, press "Compute" button below.

Comparison Analysis
	(Do not enter anything here. Just push the compute button when you are finished entering information in the top panel.)

Should You Decide To Own This Item At The End Of The Lease Period...
Below is the cost to lease and then purchase at the end of the lease term (i.e. exercise the purchase option of the lease), as compared to the cost to buy (and possibly finance with a loan). In both cases you would own the item at the end of the specified time period.
Cost to Lease and Purchase at End of Lease		Cost to Purchase
Total Cash Outflow - Lease Payments $		Total Cash Outflow - Purchase $
Present Value Cost To Lease $		Present Value Cost To Own $
Present Value Cost To Purchase at End of Lease $
Comparable Amount $	ð	ï Comparable Amount $
Should You Decide Not To Own This Item At The End Of The Lease Period...
Below is the cost to lease without purchasing at the end of the lease term (i.e. not exercising the purchase option of the lease), as compared to the cost to purchase and then sell the item (after paying off any loan). In both cases you would not own the item at the end of the specificed time period.
Cost To Lease Without Purchasing		Cost To Purchase and Sell
Present Value Cost To Lease $		Present Value Cost To Own $
		Sales Proceeds (Residual Value) $
Comparable Amount $	ð	ï Comparable Amount $

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