Leasing means paying for the use of a car; buying means owning the residual value at the end. This calculator compares total costs over the same term.
Buying usually wins if you keep cars long — the years after the loan is repaid are the cheap ones. Leasing wins on predictability and for businesses that deduct payments.
Watch the lease details this comparison simplifies: mileage caps, wear charges and mandatory insurance levels often tilt the result further toward buying.
The comparison depends heavily on the residual value assumed at the end of the term, which is the one number neither side knows in advance. A lease prices it in and takes the risk; an owner carries it and finds out at resale. Where used-car prices move sharply, that risk transfer is worth real money.
Mileage is where lease costs most often diverge from the quote. Contracts price a fixed annual allowance and charge per kilometre beyond it, so a commute that grows by 5,000 km a year can add several hundred to the annual cost without any change to the payment shown on the agreement.
For a business the tax treatment can outweigh the arithmetic entirely: lease payments are usually deductible as an operating expense while a purchase is capitalised and depreciated over years. Which is better depends on the local rules and the profit position, not on the total cost of the car.
Frequently asked questions
Is it cheaper to lease or buy a car?
Buying usually wins if you keep cars long — the years after financing ends are the cheap ones. Leasing wins on predictability, always-new cars, and for businesses that deduct the payments.
What costs does leasing hide?
Mileage caps with per-kilometre penalties, wear-and-tear charges at return, mandatory full insurance and fees for early exit. They often tilt the comparison further toward buying.
What is residual value?
The car's worth at the end of the term. Owners keep it as an asset; a lease prices it in — you pay the depreciation between new price and residual, plus interest and margin.