Car Lease vs Buy Calculator

Compare the true cost of leasing (PCP/PCH) versus buying a car. Accounts for depreciation, finance interest and residual value to show which option is cheaper over your chosen period.

Last updated: April 2026

Vehicle details
Buying
New cars: 15–25%/yr. Popular used models: 10–15%/yr.
Leasing (PCP or PCH)
Lease vs Buy comparison
Total cost difference
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Buy
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total net cost
Lease
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total payments
Depreciation cost (buy) -
Finance interest (buy) -
Residual value (buy) -
Monthly effective cost (buy) -

Leasing versus buying a car

The financial comparison between leasing (PCP or PCH) and buying depends primarily on how much the car depreciates relative to the implicit cost built into the lease. A lease provider prices the monthly payments to recover the expected depreciation plus a profit margin plus the cost of their capital - if you can beat their depreciation assumptions by choosing a low-depreciation car and selling at a good price, buying wins financially. If the car depreciates heavily (which new cars typically do), leasing can be competitive.

PCP versus PCH

A Personal Contract Purchase (PCP) is a hire purchase with a large optional final payment (the Guaranteed Minimum Future Value, or GMFV). At the end of the term, you can pay the GMFV and keep the car, return it (with nothing further owed if within mileage limits and in good condition), or use any equity (if the car is worth more than the GMFV) as a deposit on a new deal. A Personal Contract Hire (PCH) is a straightforward rental - at the end, you return the car with no option to purchase. PCH payments are typically slightly cheaper than PCP for the same car, but you build no equity whatsoever.

What leasing hides

Monthly lease payments look attractively low but do not reflect the total cost of accessing the vehicle. Mileage restrictions (typically 8,000–15,000 miles per year in standard deals) trigger excess mileage charges (5–30p per mile over) that can be substantial. Wear and tear charges at handback are another source of unexpected cost. Gap insurance (to cover the difference between the car's market value and the outstanding finance if written off) is an additional cost. Over a 3-year period, all-in lease costs often compare less favourably to buying and selling than the headline monthly payment suggests.

Frequently asked questions

EVs currently depreciate significantly faster than equivalent petrol cars as the market matures and new models with better range and technology arrive. This rapid depreciation makes PCP or PCH relatively attractive for EVs - you transfer the depreciation risk to the finance company (which prices it into the GMFV or monthly payment) rather than bearing it yourself. For EVs with strong residual values (some premium brands maintain value better), buying still makes sense. This is a fast-changing market - always compare the total cost of a specific deal against buying the same car outright and selling after the same period.
Excess mileage charges are typically 5–25p per mile depending on the car and contract. For context, driving 3,000 miles over a 15,000-mile-per-year contract over 3 years costs £450–£2,250 at these rates. Always select a mileage allowance that realistically covers your expected usage - upgrading the mileage at the time of contracting is significantly cheaper than paying excess charges at the end. If your mileage varies significantly year to year, PCH/PCP contracts may not be well-suited to your usage pattern.
Early termination of a PCP or PCH contract is possible but typically expensive. Most contracts allow voluntary termination once you have paid 50% of the total amount payable (under the Consumer Credit Act 1974, for regulated agreements). Before that point, you may face significant early termination charges. If the car is in negative equity (worth less than the outstanding finance), returning early requires paying the shortfall. Always read the early termination terms before signing any finance agreement.

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