Car Leasing vs Buying Calculator
Compare the true cost of leasing, buying with cash, Hire Purchase and PCP over the same period — not just the monthly payment.
Is it cheaper to lease a car or buy it?
It depends on resale value. A lease's true cost is every rental, fee and charge, because you own nothing at the end. Buying costs what you pay minus what the car is still worth. Buying and keeping a car longer is often cheaper, but a strong lease deal on a fast-depreciating car can beat it.
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Comparing a £349 lease with a £520 finance payment is misleading: part of a finance payment builds equity in a car you'll own, while a lease payment doesn't. This calculator adds up every cost over the same period, subtracts the car's value when you buy, and counts any finance still owed.
Enter your lease quote and purchase details below. Because future car values are uncertain, the results show how the answer changes if the car is worth more or less, and the resale value and lease payment at which the options break even.
Your comparison
What do you want to compare with leasing?
How long will you keep/use the car?
Every option is measured over the same 3 years. The lease term is set to match.
Lease (Personal Contract Hire)
Initial rental
"6 + 35" = £2,100 upfront, then 35 payments.
An initial rental is an advance rental payment, not a refundable deposit — it buys you no share of the car.
Value of the car at the end
Resale value
Gives an estimated value of £21,494 after 3 years.
Future vehicle values are uncertain. Adjust this assumption to test different scenarios — see the sensitivity table in the results.
Buy outright could cost £244 less than leasing over 3 years
Based on the figures and assumptions you entered — not a general rule. The result is particularly sensitive to the car's future resale value.
Lease (PCH)
£15,850
True monthly cost: £440
Advertised payment £350/month
Buy outright
£15,606
True monthly cost: £433
Car worth about £21,494 at the end — already deducted
Difference: £244 — about £7/month.
Lease (PCH): where the money goes
- Initial rental£2,100
- Monthly rentals (35)£12,250
- Running costs£1,500
- True cost£15,850
Buy outright: where the money goes
- Depreciation (price − resale)£13,506
- Running costs£2,100
- True cost£15,606
Cash leaving your bank: £37,100. The car you keep (£21,494) is deducted to give the true cost.
Cost of getting the car
Lease £14,350 · Buy outright £13,506
Total cost of motoring
Lease £15,850 · Buy outright £15,606
Total cost over 3 years
Lease (PCH): £15,850 · Buy outright: £15,606
Cumulative true cost month by month
Buying lines subtract the car's estimated value (and add any finance still owed) each month, so a cash purchase isn't shown as £35,000 lost. Values follow a smooth depreciation curve between today and your end value.
Buy outright is lower-cost than leasing throughout the 3 years.
What if the car is worth more or less?
| Value after 3 years | Buy outright cost | Compared with leasing |
|---|---|---|
| £17,195 (-20%) | £19,905 | Leasing £4,055 lower |
| £19,345 (-10%) | £17,755 | Leasing £1,905 lower |
| £21,494 (your estimate) | £15,606 | Buying £244 lower |
| £23,644 (+10%) | £13,456 | Buying £2,394 lower |
| £25,793 (+20%) | £11,307 | Buying £4,543 lower |
Break-even resale value
If the car is worth more than about £21,250 after 3 years, buy outright has the lower estimated cost under your other assumptions.
Break-even lease payment
A lease would need to cost about £344/month, with the same upfront structure and other assumptions, to match buy outright.
What if I drive more?
| Annual miles | Lease excess charge | Lease true monthly |
|---|---|---|
| 8,000 | £0 | £440 |
| 10,000 (+2,000) | £720 | £460 |
| 13,000 (+5,000) | £1,800 | £490 |
Estimates. Higher mileage would usually also lower a bought car's resale value, which isn't changed here.
What if I keep the bought car longer?
Blank = £350. Future lease prices are unknown.
| Years | Car value | Buy: cost/month | Repeated leasing: cost/month |
|---|---|---|---|
| 3 | £21,494 | £433 | £440 |
| 5 | £15,530 | £398 | £440 |
| 7 | £11,220 | £363 | £440 |
| 10 | £6,891 | £319 | £440 |
Illustrative: the car keeps losing value at your implied yearly rate, and each new lease is assumed to repeat the same structure at the rental above.
What this means for you
- Your £350 lease is really costing about £440/month — the initial rental, fees, running costs and mileage charges add around £90/month when spread across the contract.
- Depreciation is the main cost of owning: your assumptions imply about £13,506 over 3 years, and the car should still be worth about £21,494.
Estimates for guidance only, not financial advice. Check the exact terms of any lease or finance agreement. Interest uses APR as an effective annual rate.
Understanding the true cost
Leasing vs buying: what's the difference?
Leasing (Personal Contract Hire) is long-term rental: you pay an initial rental and fixed monthly payments, then hand the car back. Buying — with cash, Hire Purchase or PCP with the final payment — means you own the car and keep whatever it's worth at the end.
How do you calculate the true cost of a car lease?
Add the initial rental, every monthly rental, fees, any maintenance package and expected excess-mileage and end-of-contract charges, plus running costs you pay yourself. Divide by the number of months to get the true monthly cost. There is no car left at the end, so every pound is a cost.
How do you calculate the true cost of buying a car?
Take everything you pay — the price or deposit, finance payments, final payment and fees — add any finance still owed when you stop, then subtract what the car is worth. Add running costs. For a cash purchase that is simply depreciation plus running costs.
Why shouldn't I compare monthly payments?
A finance payment partly repays the loan and builds equity in a car you'll own; a lease payment doesn't. A £520 finance payment can be cheaper overall than a £349 lease once the car's resale value is counted.
Is buying outright always cheapest?
Not always. It avoids interest, but the cash could have earned a return elsewhere, and a car that loses value quickly can make a good lease deal cheaper. Test different resale values in the sensitivity table.
What happens at the end of PCP?
You can hand the car back (subject to mileage and condition), pay the optional final payment and keep it, or part-exchange it. If the car is worth more than the final payment, the difference is equity you can use.
Sources
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