Lease vs Buy Car Calculator

The lease-vs-buy decision usually gets framed around the monthly payment, which is the wrong frame. A lease at £350/month for 36 months totals £12,600 with nothing to show at the end. Buying the same car with a £5,000 deposit and 48 months of finance at £450/month totals £26,600 in payments, but you own a car that is probably still worth £10,000. The true comparison is total cost (after subtracting any remaining vehicle value) divided by months of use, not the headline monthly figure.

The calculator works this out for you. It includes finance interest, depreciation, insurance, road tax (VED) and routine maintenance for buying; lease payments and lease-side insurance for leasing. Maintenance is typically included in lease deals, which is a hidden saving worth £1,000+ over 3 years on most cars. The 'cheaper option' line at the bottom gives you the actual answer in pounds, not in monthly-payment optics.

Leasing wins in three specific scenarios. First, if you swap cars every 2 to 3 years anyway: you are essentially paying for the depreciation either way, and a lease eliminates the risk of getting stuck with a hard-to-sell car. Second, if you can claim the lease through a business: corporation tax relief on the lease payments and recoverable VAT change the maths significantly. Third, if you genuinely want the latest tech (especially in EVs, where battery improvements are still meaningful year-on-year).

If a 3-year lease at £350/month replaces your existing buy-and-keep cycle of paying off a £25,000 car over 5 years and selling for £8,000, the cost-per-month is roughly comparable but the lease comes with full warranty and fixed costs. The hidden gotcha is mileage limits: most leases cap at 8,000 to 12,000 miles per year, with excess-mile charges of 6p to 15p per mile. Go 5,000 miles over and you owe £400+ at handover.

Buying outright (or with finance you pay off) wins in the long run for high-mileage drivers, anyone who keeps cars for 5+ years, and anyone happy driving a 5-to-10-year-old car for free after the loan is paid. A typical mid-size petrol car bought new at £25,000 with a 5-year loan is fully owned at age 5 and worth around £10,000 at trade-in; if you keep it another 5 years the per-month cost halves because the only ongoing cost is fuel, insurance, and maintenance.

Buying also gives you the freedom to modify, sell at any time, or simply hand it down to a teenager. Leases bind you to fixed mileage, factory-spec returns, and ironclad return-condition rules (any damage above 'fair wear and tear' is charged at handover). Use the [should I keep my old car](/should-i-keep-my-old-car) calculator alongside this one if you are deciding whether to stick with what you have.

PCP is finance plus a balloon payment at the end. You pay a deposit, monthly payments for 3 to 4 years, then choose: hand the car back (like a lease), pay the balloon and own it outright, or trade it in toward a new PCP. Monthly payments are lower than HP because you are only paying off the depreciation portion. The balloon (called the Guaranteed Future Value) is set by the finance company up-front based on expected resale value.

PCP hides a layer of interest. The full APR usually only becomes obvious if you actually pay the balloon to keep the car; many people roll into the next PCP without doing the maths. From a 'lease vs buy' perspective, PCP is closer to leasing in cost structure but gives you the optionality to buy. If you are comparing a PCP deal against a lease, set the buying side of this calculator with the same deposit, monthly and total months as the PCP, then add the balloon to the depreciation field.