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Step 1
Your numbers
Adjust these and the verdict below updates instantly.
The car and how long you'll keep it
$
%
New cars typically lose 15 to 20% per year.
%
5 to 7% is a reasonable long-run market number.
Annual running costs
$
Same on all three paths.
$
Lease uses 30% of this (warranty).
$
Cash/loan: $342/mo. Lease: $295/mo.
Bank loan
$
%
Financed $32K → $641/mo.
Rolling lease
$
$
Acquisition fee + first payment. Paid again each time you renew the lease.
Step 2
The verdict
🏆
The verdict
Cash buy
Your $40K becomes $13K after 7 years — $3K more than rolling lease preserves.
The trade-off
Your $40K leaves your investable pile on day one, so you lose out on ~$24K of compounding. In exchange: no monthly payments, no debt, full freedom to sell or modify whenever.
Assumption: you have $40K today — enough to buy outright. Whatever doesn't go to the car keeps compounding at 7% real return. Financing payments (loan, lease) come out of that pile. Running costs (insurance, maintenance, fuel) are paid from your paycheck, not your savings.
#1
🏆Cash buy
Your $40K becomes
$13K
after 7 years · lost $27K · loses least
- Upfront
- $40K
- Monthly (all-in)
- $342
- Flexibility
- High
- Repair risk
- Your problem
Today
Upfront payment-$40K
Stays invested$0
Car asset$40K
Each month
Loan / lease paymentNone
Running costs (from income)$342
At year 7
Invested portfolio$0
Car value$13K
Loan balance-$0
#2
Bank loan
Your $40K becomes
$12K
after 7 years · lost $28K
- Upfront
- $8K
- Monthly (all-in)
- $983
- Flexibility
- Medium
- Repair risk
- Your problem
Today
Upfront payment-$8K
Stays invested$32K
Car asset$40K
Loan balance-$32K
Each month
Loan payment × 60mo$641
Running costs (from income)$342
At year 7
Invested portfolio-$882
Car value$13K
Loan balance-$0
#3
Rolling lease
Your $40K becomes
$10K
after 7 years · lost $30K
- Upfront
- $2K
- Monthly (all-in)
- $745
- Flexibility
- Locked in
- Repair risk
- Covered
Today
Upfront payment-$2K
Stays invested$39K
Car asset$0
Each month
Lease payment$450
Running costs (from income)$295
Renewal every 3yr$2K
At year 7
Invested portfolio$10K
Car value$0
Loan balance-$0
Beyond the math
What you're actually signing up for with each option: what's covered vs. on you, what happens when the car has a problem, and who this path is for.
#1
🏆Cash buy
What's covered
- ✓Routine service — free under factory warranty (yrs 1–3)
- ✗After warranty: $2k–8k major repairs on you
- ✗Tires, brakes, wipers, all consumables
- ✓Can drop to liability-only insurance in a few years
- ✓Unlimited mileage, any modifications, any use
When things go wrong
- Mechanical: free at dealer under warranty; $2–8k out-of-pocket after.
- Accident: your insurance + deductible, any repair shop.
- Totaled: insurance pays current market value; you absorb any gap.
- Worst case: out-of-warranty failure on a car worth less than the repair. Eat the loss, scrap it, move on.
Pick this if
- • You plan to keep the car 10+ years and drive it into the ground.
- • You hate debt and monthly bills.
- • Your real return is low (< 4%), so tying up cash costs little.
- • Car price is a small fraction of your net worth.
- • You want the option to drop to liability-only in a few years.
#2
Bank loan
What's covered
- ✓Routine service — free under factory warranty (yrs 1–3)
- ✗After warranty: same $2–8k risk as cash
- ✗Full coverage insurance mandatory for the whole term
- ✗Gap insurance often required (or strongly recommended)
- ✓Unlimited mileage, modifications allowed (may void warranty)
When things go wrong
- Mechanical: same warranty coverage as cash. Loan keeps running during repair downtime.
- Accident: your insurance. Bank must approve the repair shop in some cases.
- Totaled: insurance pays book value; gap insurance covers the rest of the loan balance.
- Worst case: repair exceeds your equity and you're underwater. Some borrowers keep paying on a dead car rather than default.
Pick this if
- • Your real investment return beats the APR (7% vs 7.5%).
- • You want to keep emergency fund / invested portfolio liquid.
- • You'll keep the car 5–10 years (pay off, then drive it free).
- • Your credit is good (or you found a manufacturer 0% promo).
- • You're disciplined about keeping the cash invested.
#3
Rolling lease
What's covered
- ✓All mechanical issues (warranty runs the whole lease term)
- ✓Gap insurance usually bundled into the lease pricing
- ✗Tires, brakes, wipers, all consumables — still on you
- ✗Mileage cap: 10–12k/yr; overage $0.15–$0.30/mile
- ✗Full coverage + higher liability limits required
When things go wrong
- Mechanical: almost never your cost. Dealer fixes under warranty, often with a loaner.
- Accident: your insurance + deductible. At lease end, unrepaired damage → $500–3,000+ in wear charges.
- Totaled: gap insurance (usually bundled) handles the residual. You walk away car-less but without a big bill.
- Worst case: mileage overage at turn-in. 10k miles over at $0.20/mi = $2,000 you didn't plan for.
Pick this if
- • You want a new car every 3–4 years (latest safety tech, continuous warranty).
- • Your business can deduct the monthly payment.
- • You drive predictably within the mileage allowance.
- • You want one fixed monthly line item, no repair surprises.
- • The lease is promotional (subsidized money factor, high residual).
Month-by-month breakdown
Where the money is on each path. The cash, loan, and lease columns show net worth that month.
| Month | Year | Cash buy | Bank loan | Rolling lease | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Invested | Car | Debt | Net worth | Invested | Car | Debt | Net worth | Invested | Car | Debt | Net worth | ||
| 0 | 0 | $0 | $40K | $0 | $40K | $32K | $40K | -$32K | $40K | $39K | $0 | $0 | $39K |
| 1 | 0.08 | $0 | $39K | $0 | $39K | $32K | $39K | -$32K | $39K | $38K | $0 | $0 | $38K |
| 2 | 0.17 | $0 | $39K | $0 | $39K | $31K | $39K | -$31K | $39K | $38K | $0 | $0 | $38K |
| 3 | 0.25 | $0 | $38K | $0 | $38K | $31K | $38K | -$31K | $38K | $38K | $0 | $0 | $38K |
| 4 | 0.33 | $0 | $38K | $0 | $38K | $30K | $38K | -$30K | $38K | $38K | $0 | $0 | $38K |
| 5 | 0.42 | $0 | $37K | $0 | $37K | $30K | $37K | -$30K | $37K | $37K | $0 | $0 | $37K |
| 6 | 0.50 | $0 | $37K | $0 | $37K | $29K | $37K | -$29K | $37K | $37K | $0 | $0 | $37K |
| 7 | 0.58 | $0 | $36K | $0 | $36K | $29K | $36K | -$29K | $36K | $37K | $0 | $0 | $37K |
| 8 | 0.67 | $0 | $36K | $0 | $36K | $28K | $36K | -$28K | $36K | $37K | $0 | $0 | $37K |
| 9 | 0.75 | $0 | $35K | $0 | $35K | $28K | $35K | -$28K | $35K | $36K | $0 | $0 | $36K |
| 10 | 0.83 | $0 | $35K | $0 | $35K | $27K | $35K | -$27K | $35K | $36K | $0 | $0 | $36K |
| 11 | 0.92 | $0 | $34K | $0 | $34K | $27K | $34K | -$27K | $34K | $36K | $0 | $0 | $36K |
| 12 | 1 | $0 | $34K | $0 | $34K | $26K | $34K | -$27K | $34K | $36K | $0 | $0 | $36K |
| 15 | 1.25 | $0 | $33K | $0 | $33K | $25K | $33K | -$25K | $32K | $35K | $0 | $0 | $35K |
| 18 | 1.50 | $0 | $31K | $0 | $31K | $23K | $31K | -$24K | $31K | $34K | $0 | $0 | $34K |
| 21 | 1.75 | $0 | $30K | $0 | $30K | $22K | $30K | -$22K | $30K | $33K | $0 | $0 | $33K |
| 24 | 2 | $0 | $29K | $0 | $29K | $20K | $29K | -$21K | $28K | $33K | $0 | $0 | $33K |
| 27 | 2.25 | $0 | $28K | $0 | $28K | $19K | $28K | -$19K | $27K | $32K | $0 | $0 | $32K |
| 30 | 2.50 | $0 | $27K | $0 | $27K | $17K | $27K | -$17K | $26K | $31K | $0 | $0 | $31K |
| 33 | 2.75 | $0 | $26K | $0 | $26K | $15K | $26K | -$16K | $25K | $30K | $0 | $0 | $30K |
| 36 | 3 | $0 | $25K | $0 | $25K | $14K | $25K | -$14K | $24K | $29K | $0 | $0 | $29K |
| 42 | 3.50 | $0 | $23K | $0 | $23K | $10K | $23K | -$11K | $22K | $26K | $0 | $0 | $26K |
| 48 | 4 | $0 | $21K | $0 | $21K | $7K | $21K | -$7K | $20K | $24K | $0 | $0 | $24K |
| 54 | 4.50 | $0 | $19K | $0 | $19K | $3K | $19K | -$4K | $19K | $22K | $0 | $0 | $22K |
| 60 | 5 | $0 | $18K | $0 | $18K | -$770 | $18K | -$0 | $17K | $20K | $0 | $0 | $20K |
| 66 | 5.50 | $0 | $16K | $0 | $16K | -$797 | $16K | -$0 | $16K | $18K | $0 | $0 | $18K |
| 72 | 6 | $0 | $15K | $0 | $15K | -$824 | $15K | -$0 | $14K | $16K | $0 | $0 | $16K |
| 78 | 6.50 | $0 | $14K | $0 | $14K | -$852 | $14K | -$0 | $13K | $12K | $0 | $0 | $12K |
| 84 | 7 | $0 | $13K | $0 | $13K | -$882 | $13K | -$0 | $12K | $10K | $0 | $0 | $10K |
Heads upThis calculator is a planning aid, not financial advice. Tax rules, visa requirements, market returns, and personal circumstances change — what you see here is a directional estimate based on your inputs. Before acting on any number, check with a qualified tax advisor, financial planner, or immigration lawyer who knows your actual situation.