Leasing looks cheaper month to month, but buying lets you recover value when you sell. This calculator puts both options on the same footing over the same period so you can see the real difference in total cost. It suits anyone deciding whether to lease or finance a car, van or piece of equipment.
How it works
The two paths are evaluated over the same number of months (years × 12):
- Buy with finance: the amount financed is
price − deposit. The tool computes the monthly repayment with the standard amortising formulapayment = P·r·(1+r)ⁿ / ((1+r)ⁿ − 1), whereris the monthly rate (annual rate ÷ 12 ÷ 100) andnis the number of months. Total cost = (monthly payment × months) + deposit − resale value, because the resale value is money you keep. - Lease: total cost = (monthly lease payment × months) + any upfront rental. Nothing is recovered at the end, so there is no resale offset.
It then subtracts the buy net cost from the lease total to show which is cheaper and by how much. Tax, insurance and servicing are excluded so the finance comparison stays clear.
Worked example
A £30,000 car over 3 years (36 months), £3,000 deposit, 7.5% loan rate, expected £15,000 resale value; lease at £330/month with £1,980 upfront:
| Option | Calculation | Net cost |
|---|---|---|
| Buy (finance) | ~£842/mo × 36 + £3,000 − £15,000 | ≈ £18,298 |
| Lease | £330 × 36 + £1,980 | £13,860 |
Here leasing is about £4,400 cheaper over three years, primarily because the monthly lease payment is well below the financed repayment and the car depreciates to half its value regardless of which path you choose.
But change one number — say the resale is £20,000 instead of £15,000 — and the buy net cost falls to roughly £13,298, making buying slightly cheaper. The resale value assumption is often the most important input.
What drives the decision
Resale value is the swing factor. Cars that hold their value well (lower depreciation) push buying into the lead because you recover more at the end. Cars with steep depreciation often make leasing the rational choice, since you are effectively paying for the depreciation in both cases, but a lease payment is priced to the manufacturer’s forecast.
Loan interest rate matters too. A high loan rate increases every monthly repayment, raising the buy total. If your personal loan rate is significantly higher than the equivalent finance rate offered with a lease deal, that shifts the comparison.
Upfront rental can be deceptive. Lease deals sometimes advertise low monthly payments but require a large initial rental (equivalent to 3–9 months upfront). This calculator includes that cost in the lease total so you compare like for like.
What the calculator excludes. Insurance, road tax, servicing and maintenance vary too widely to model generically, but they can materially affect the real total — especially if a lease includes a maintenance package. Add those figures manually to the total once you have the base comparison.
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