How should a lease-versus-purchase analysis be conducted? How can this worksheet be applied to help you or someone else make their financing decision? Consider the following scenario: Should Alex lease or purchase? Alex is considering the purchase of a Chevrolet Camero and has negotiated a final price of $26,305. He's trying to decide whether to lease or purchase the vehicle. If he leases, he'll have to pay a $600 security deposit, a capital cost reduction (down payment) equal to 10% of the vehicle's cost, and monthly payments of $466 over the three-year term of the closed-end lease. The Camaro will have a residual value of $10,522. On the other hand, if he buys the Camaro, he'll have to make a 10% down payment, pay sales tax equal to 7% of the vehicle's price, and make monthly payments of $699 on a three-year loan that charges 4% interest. Be aware that funds used as down payments and security deposits incur an opportunity cost of 3%, as they could have earned interest for Alex over the period of the lease or loan.