Buy, Lease or Finance a Car

Compare what a car costs per month if you pay cash, take out a car loan or lease it, including depreciation, running costs and interest.

Purchase price

What the car costs to buy or finance.

Term (months)

How long you keep the car: the term of the lease and of the loan, from 12 to 96 months.

Value at the end

What the car is still worth at the end if you own it. The car depreciation calculator gives an estimate.

Running costs when you own it, per month

Insurance, road tax or registration, and maintenance when the car is yours.

Lease cost per month

The monthly lease payment, plus any insurance or maintenance that is not included and that you pay yourself.

Loan rate (%)

The APR of the car loan. Below you choose whether it is effective (UK, EU) or nominal (usually in the US).

Savings rate (%)

The interest you miss out on when you pay cash.

Loan rate type

EffectiveNominal

Effective: twelve months of interest add up to exactly the annual rate; this is how the APR is quoted in the UK and the EU. Nominal: one twelfth of the annual rate every month, as US lenders usually quote the APR.

Cheapest option, per month

£450.00

Buy, per month

£585.11

Finance, per month

£638.08

Lease, per month

£450.00

Monthly loan payment

£842.25

Break-even between buying and leasing

No break-even within the term

Total cost by month

Buy
Finance
Lease

Show the table

Month	Buy	Finance	Lease

Please note: This is an example calculation, not financial advice. Personal circumstances, changes in rules and rates, and additional costs are not included. If in doubt, talk to a financial adviser.

Fuel or charging, mileage limits, deposits, balloon payments, end-of-lease charges and tax effects are not included.

How this number is calculated

The blocks use your input. Change a value above and they update with it.

Step 1 · Missed savings interest

Purchase price£35,000.00 × power of1 + Monthly savings rate (as a fraction)0.001652 Term (months)48 − 1 =Missed savings interest£2,885

Step 2 · Buy, total

Purchase price£35,000.00 − Value at the end£17,000.00 + Running costs when you own it, per month£150.00 × Term (months)48 + Missed savings interest£2,885 =Buy, total£28,085

Step 3 · Monthly loan payment

(becauseMonthly loan rate (as a fraction)0.006045 does not equal 0 ) Purchase price£35,000.00 × Monthly loan rate (as a fraction)0.006045 ÷ 1 − power of1 + Monthly loan rate (as a fraction)0.006045 − Term (months)48 =Monthly loan payment£842.25

Step 4 · Finance, total

Monthly loan payment£842.25 × Term (months)48 − Value at the end£17,000.00 + Running costs when you own it, per month£150.00 × Term (months)48 =Finance, total£30,628

Step 5 · Lease, total

Lease cost per month£450.00 × Term (months)48 =Lease, total£21,600

Step 6 · Cheapest option, per month

smallest ofBuy, total£28,085 Finance, total£30,628 Lease, total£21,600 ÷ Term (months)48 =Cheapest option, per month£450.00

How the calculation works

Compare what a car costs you if you pay cash, take out a car loan or lease it. The calculator includes depreciation, running costs and interest, and puts the three options side by side per month.

When you buy, you pay for the car in one go. Your costs are the depreciation (purchase price minus the value at the end), the running costs for insurance, tax and maintenance, and the interest you miss because the money is no longer in savings. When you finance, you pay the car off with a loan: your costs are all the loan payments minus the value of the car you then own, plus the running costs. When you lease, you pay the lease cost and hand the car back at the end. The chart shows what each option has cost up to a given month, with depreciation spread over the term.

Formula

Buy = purchase price − value at the end + running costs × months + missed savings interest. Finance = loan payment × months − value at the end + running costs × months. Lease = lease cost × months. Per month = total ÷ months. Loan payment = price × r ÷ (1 − (1 + r)^−n), with r the monthly rate: (1 + APR)^(1/12) − 1 for an effective rate, or APR ÷ 12 for a nominal rate.

Assumptions

Fuel or charging is the same for all three options and is not included.
When buying or financing you pay the full price, with no deposit or balloon payment.
The car loses the same percentage of its value every month, from the purchase price to the value at the end.
The lease cost includes whatever you enter; mileage limits and end-of-lease charges are not included.
The value at the end is an estimate; a sale can bring in more or less.

Example calculations

The button fills in the calculator above, so you can carry on from there.

Average car

Cheapest option, per month
£550.00

Purchase price £35,000.00 · Term (months) 48 · Value at the end £17,000.00 · Running costs when you own it, per month £175.00 · Lease cost per month £550.00 · Loan rate (%) 7.5 · Savings rate (%) 2 · Effective
Low lease price

Cheapest option, per month
£449.00

Purchase price £35,000.00 · Term (months) 48 · Value at the end £17,000.00 · Running costs when you own it, per month £175.00 · Lease cost per month £449.00 · Loan rate (%) 7.5 · Savings rate (%) 2 · Effective
Keeping it longer

Cheapest option, per month
£550.00

Purchase price £35,000.00 · Term (months) 72 · Value at the end £11,000.00 · Running costs when you own it, per month £175.00 · Lease cost per month £550.00 · Loan rate (%) 7.5 · Savings rate (%) 2 · Effective

Frequently asked questions

Is it cheaper to buy, finance or lease?

It depends mostly on the lease cost and the value at the end. For a car of 35,000 over 48 months, worth 17,000 at the end, with running costs of 150 a month, buying costs 585.11 a month, financing at 7.5% costs 638.08, and a lease of 450 a month costs 450.

Why is financing more expensive than paying cash?

When you finance, you pay interest on the loan; when you pay cash, you only miss out on savings interest. As the loan rate is almost always higher than the savings rate, financing costs more.

Why does the value at the end matter so much?

When you buy or finance, the car is yours at the end: what it is still worth comes off your costs. The higher that value, the better buying or financing looks. The car depreciation calculator gives an estimate.

What is the break-even point?

The moment the total cost of buying equals the total cost of leasing. For a car of 20,000 over 60 months, worth 8,000 at the end, against a lease of 399 a month, buying becomes cheaper than leasing after 3 years. Without a break-even, the same option stays cheaper for the whole term.

What is not included?

Fuel or charging, excess mileage on a lease, insurance excess after damage, a deposit, a balloon payment and tax rules for business use. They can change the outcome considerably; add them where they apply to you.

Sources and checks

Sources

CONC App 1.2: Total charge for credit rules for other agreements | FCA Handbookhandbook.fca.org.uk · accessed 5 October 2026

How we check it

This calculator has 10 fixed checks: 6 calculations with a result that is fixed in advance, and 4 cases of invalid input that must be rejected. They all run automatically every time we publish; if one fails, the calculator does not go live.

See the calculations

Purchase price £35,000.00 · Term (months) 48 · Value at the end £17,000.00 · Running costs when you own it, per month £175.00 · Lease cost per month £550.00 · Loan rate (%) 7.5 · Savings rate (%) 2 · Effective → Cheapest option, per month £550.00
Purchase price £35,000.00 · Term (months) 48 · Value at the end £17,000.00 · Running costs when you own it, per month £175.00 · Lease cost per month £449.00 · Loan rate (%) 7.5 · Savings rate (%) 2 · Effective → Cheapest option, per month £449.00
Purchase price £35,000.00 · Term (months) 72 · Value at the end £11,000.00 · Running costs when you own it, per month £175.00 · Lease cost per month £550.00 · Loan rate (%) 7.5 · Savings rate (%) 2 · Effective → Cheapest option, per month £550.00
Purchase price £20,000.00 · Term (months) 60 · Value at the end £8,000.00 · Running costs when you own it, per month £130.00 · Lease cost per month £399.00 · Loan rate (%) 6.9 · Savings rate (%) 2 · Effective → Cheapest option, per month £364.69
Purchase price £30,000.00 · Term (months) 36 · Value at the end £18,000.00 · Running costs when you own it, per month £150.00 · Lease cost per month £600.00 · Loan rate (%) 0 · Savings rate (%) 0 · Effective → Cheapest option, per month £483.33
Purchase price £35,000.00 · Term (months) 48 · Value at the end £17,000.00 · Running costs when you own it, per month £175.00 · Lease cost per month £550.00 · Loan rate (%) 7.5 · Savings rate (%) 2 · Nominal → Cheapest option, per month £550.00

Changes

5 October 2026: First version. New choice of loan rate type: a US APR is nominal, a UK APR is effective. Sources added.

Last reviewed: 5 October 2026 · How we build and check our calculators