Auto Lease vs Buy Calculator
Compare total cost of leasing vs buying a vehicle over the same period.
What this calculator does
This calculator compares the net cost of financing a car on PCP or contract hire against buying it outright on hire purchase or a loan over the same term. Enter the vehicle price, your deposit, the monthly payment on the finance deal, the term, the guaranteed future value, and the interest rate on the purchase route, and it returns the total cost of each with ownership credited to the buying side.
That credit is what makes the comparison honest. Comparing a £389 PCP payment against a £984 hire purchase payment tells you nothing, because at the end of one you hand the keys back and at the end of the other you own a car worth several thousand pounds.
When to use it
Use it in the showroom, when the same car is quoted three different ways and only the monthly figures are being discussed. UK car finance is sold almost entirely on monthly cost, so the total-cost view is the one the sales process does not provide.
It is also the tool for the how-long-will-I-keep-it question, which decides the answer more than any rate does. PCP and hire purchase are close over three years and diverge sharply over eight, because the value of buying comes from the years after the finance ends. And run your real annual mileage against the allowance — excess mileage charges quietly move a cheap-looking PCP into expensive territory.
Understanding the inputs
Vehicle price is the on-the-road price after any discount, and a manufacturer deposit contribution effectively reduces it. Deposit combines your cash, part-exchange equity, and that contribution.
Monthly payment and term in months come from the dealer's quotation. The residual figure is the guaranteed future value on a PCP, commonly 40 to 55 percent of price over three years depending on the model and the mileage limit. The interest rate is the APR you would pay to finance the car outright on HP or a personal loan — use a rate you have actually been quoted after a soft search rather than the representative APR.
How is this calculated?
Lease Total = Down + (Monthly × Term). Buy Total = Down Payment + Total Interest Paid. Compare net cost factoring in residual value ownership.
A worked example
Take a £34,000 car. A PCP at £389 a month for 36 months with a £3,000 deposit means paying £17,004 across the term, then handing the car back against a £16,000 guaranteed future value — nothing owned, nothing further owed.
Buying instead on hire purchase means financing £31,000 at 8.9 percent over 36 months: about £984 a month, £38,437 including the deposit, of which £4,437 is interest. But you own a car worth roughly £16,000, so the net cost is about £22,437 against £17,004 for the PCP. Over three years the PCP is cheaper; keep the bought car three more years and the position reverses entirely.
Limitations and assumptions
The comparison excludes arrangement fees, the option-to-purchase fee at the end of an HP or PCP agreement, excess mileage charges, damage recharges at handback, road tax, and servicing. It assumes the car is worth exactly the guaranteed future value, which the used market may contradict in either direction.
Insurance and maintenance differ between the routes and are not modelled, and neither is voluntary termination or an early settlement rebate. The largest limitation is the horizon: the calculator compares one term, and the case for buying rests almost entirely on what happens after that term ends.
Common Questions
- What is the difference between PCP, HP, and leasing?
- Hire purchase repays the whole car and you own it at the end. PCP defers a large optional final payment, letting you buy, refinance, or hand back. Personal contract hire is pure leasing — you never have the option to own it, you simply rent the car for a term and return it.
- What is a guaranteed future value?
- The amount the finance company guarantees the car will be worth at the end of a PCP, which becomes your optional final payment. It is guaranteed in your favour: if the car is worth less, you hand it back and owe nothing further. If it is worth more, that difference is equity towards your next deal.
- What is voluntary termination and when can I use it?
- Section 99 of the Consumer Credit Act lets you end a regulated HP or PCP agreement once you have paid half the total amount payable, returning the car with nothing more to pay beyond fair wear and tear. It is a genuine statutory right, not a lender concession, and it does not apply to personal contract hire.
- How much do excess mileage charges cost?
- Typically 5p to 30p per mile depending on the car. A PCP capped at 8,000 miles a year, driven at 13,000, accumulates 15,000 excess miles over three years — at 15p that is £2,250 at handback. Set the allowance to your genuine mileage even though it raises the monthly payment.
- What counts as fair wear and tear?
- The BVRLA publishes the standard the industry works to, covering acceptable levels of stone chips, scratches, kerbed alloys, and interior marks. Anything beyond it is recharged at handback, and disputes are common. Get the car professionally inspected a month before return so you can fix cheap damage yourself rather than paying dealer rates.
- Is a personal loan better than PCP?
- Frequently, if you intend to keep the car. A loan makes you the owner immediately, with no mileage cap, no condition inspection, and freedom to sell whenever you like. The monthly figure is higher because you are repaying the whole car rather than deferring 40 to 50 percent of it to the end.
- Can I claim car finance costs against tax?
- Only for genuine business use, and the treatment differs by structure. Leasing and contract hire payments are generally deductible for a business, with a 15 percent restriction on cars above the CO2 emissions threshold, while purchases go through capital allowances. Personal motoring attracts no relief. Speak to an accountant before choosing a structure for business reasons.
- What happens if the car is written off during a PCP?
- Your insurer pays market value, which in the first two years is often less than the outstanding finance because of depreciation. You remain liable for the shortfall. GAP insurance covers that difference and typically costs £150 to £300 for three years — the one add-on that frequently justifies itself on a low-deposit agreement.