1. What is the Net Buy Equation?

The Net Buy equation helps compare the total cost of buying versus leasing a new car. It calculates the net cost of buying by considering up-front costs, lost interest, outstanding loan, and the car's market value.

2. How Does the Calculator Work?

The calculator uses the Net Buy equation:

Where:

• \( U \) — Up front costs ($)
• \( LI \) — Lost interest ($)
• \( O \) — Outstanding loan ($)
• \( M \) — Market value ($)

Explanation: The equation accounts for all costs associated with buying a car and subtracts the car's current market value to determine the net cost.

3. Importance of Net Buy Calculation

Details: Calculating the net cost of buying helps make an informed decision between buying and leasing a vehicle. It provides a clear financial comparison between the two options.

4. Using the Calculator

Tips: Enter all values in dollars. Include all up-front costs (down payment, taxes, fees), estimate lost interest from alternative investments, include any remaining loan balance, and research the car's current market value.

5. Frequently Asked Questions (FAQ)

Q1: What's included in up-front costs?
A: Include down payment, sales tax, title fees, registration fees, and any other immediate costs associated with purchasing.

Q2: How do I calculate lost interest?
A: Estimate what you would have earned if you invested the money instead of spending it on the car, using a conservative rate of return.

Q3: When is buying better than leasing?
A: Buying is typically better if you keep cars long-term, drive many miles, or want to build equity in the vehicle.

Q4: What are the limitations of this calculation?
A: It doesn't account for maintenance costs, insurance differences, or personal preferences about car ownership.

Q5: How often should I re-evaluate this calculation?
A: Re-evaluate whenever your financial situation changes or when considering a new vehicle purchase.