Car Lease vs Buy Calculator

Leasing (Personal Contract Hire) means paying a fixed monthly amount to use a car for 2-4 years with no option to own it at the end. You never own the vehicle, but monthly costs are predictable and often include maintenance packages. Mileage limits apply (typically 8,000-15,000 miles/year) with excess charges of 5-15p per mile.

Buying outright or through HP means you own the car and can sell it whenever you choose. The true cost of buying includes depreciation, interest (if financed), insurance, maintenance and road tax. Buying is typically cheaper over 5+ years if you keep the car long enough for depreciation to slow down.

This calculator compares the total cost of leasing versus buying over your chosen period. It accounts for the deposit, monthly payments, maintenance, depreciation (for buying) and the residual value of the car if you buy. The breakeven point — where buying becomes cheaper than leasing — is usually around 4-5 years.

UK car lease vs buy comparison 2026. Lease (PCH — Personal Contract Hire): monthly payments, no ownership at end, mileage cap. Typical £200-£600/month for mid-range cars. Buy outright: capital tied up, full ownership, full depreciation risk. PCP (Personal Contract Purchase): hybrid — monthly payments + balloon at end (option to keep). Lease cheaper monthly than PCP usually. Sample £30,000 car: 3-year PCH £300/month = £10,800 total (no asset); buy outright £30k then sell year 3 for £18k = £12k cost.

When leasing wins. Always want new car: lease easier than buying/selling every 2-3 years. High-mileage = pure depreciation cost (40-50% over 3 years on £30k car). Business use: lease costs are tax-deductible. Don't want depreciation risk (premium German marques can lose 60%+ in 3 years). Limited capital: lease frees up cash for other investments. Easy maintenance: many leases include service plans. EV salary sacrifice (employee benefit): 30-50% saving for higher-rate taxpayers — best EV finance option.

When buying wins. Keep car 5+ years: depreciation evens out, ownership benefits compound. Low mileage (under 7k/year): lease mileage caps frustrating. Want modifications: lease prohibits. Want to keep car past warranty (5-7 years): lease forces return at lease end. Strong driveway parking: lease scratches/dings can incur 'damage charges' at end. Cash buyer with no investment opportunity: opportunity cost low. Older cars (3+ years): depreciation curve flatter — buying makes sense.

UK lease deal terms to understand. Initial rental: typically 3-12 months upfront (the more upfront, the lower monthly rate). Mileage cap: 5k, 8k, 10k, 12k, 15k, 20k/year — exceed and pay 5-15p/mile penalty at end. Maintenance: optional add-on £20-£50/month, covers service + tyres + MOT. Insurance: separate (NOT included). Excess mileage charges: 8-15p/mile (£800+ for 10k overage on 3-year lease). End-of-lease damage: 'fair wear and tear' inspected — chips, scratches, dents can cost £50-£500+ each.

The EV salary sacrifice game-changer. Eligible employers offer salary sacrifice for EV lease. Higher-rate (40%) taxpayer saving: 30-50% off effective monthly cost. Sample £600/month EV lease via salary sacrifice: cost basic-rate £450/month net; higher-rate £350/month net. BIK 3% 2025/26 rising 1pp/year to 7% by 2029 — still much cheaper than equivalent petrol salary sacrifice. Tesla Model 3, Polestar 2, Hyundai Ioniq 5, MG4 popular UK options. Must use scheme to access — many UK employers (especially tech, finance, professional services) now offer.