A financial tool compares the overall costs of borrowing money to purchase an asset versus renting the asset for a specific period. For example, it allows users to input variables such as purchase price, interest rates, loan term, lease term, and residual value to determine which option presents a more favorable financial outcome.
This type of tool empowers consumers to make informed decisions by providing a clear comparison of long-term costs. It factors in elements often overlooked, such as depreciation, interest payments, and upfront fees, offering a comprehensive perspective beyond the immediate monthly payment. Historically, consumers relied on less precise calculations or professional guidance, making such readily-available resources a significant advancement in financial planning for major purchases like vehicles or equipment.
