How the comparison works
Both options are measured over the same number of months. The loan's net cost is the deposit, the payments made, the balance still owed at the end, minus what the car is worth when you sell it. The lease's cost is the upfront payment plus the monthly rentals.
This puts the two on a like-for-like basis: what each option leaves in your pocket after the same period.
Worked example
A £30,000 car with a £3,000 deposit on a 7% loan over 60 months costs £534.63 a month. After 36 months the balance is £11,941.07 and the car is worth £18,000, so the net cost of buying is £16,187.83.
Leasing the same car at £399 a month with £2,000 upfront for 36 months costs £16,364. Buying is £176.17 cheaper over the period, but only because the car is worth more than the balance left on the loan.
What changes the answer
If the car depreciates faster than assumed, the loan's net cost rises. If you keep the car beyond the lease term, the comparison changes completely, because the loan keeps saving you payments while the lease starts again.
Mileage limits and wear charges on a lease are not included here. Add any expected excess mileage or damage charges to the lease cost.
Inputs for the auto loan vs lease calculator
Vehicle price
The cash price of the car.
Deposit with a loan
What you would pay upfront if you bought it.
Loan interest rate (nominal)
The yearly rate on the purchase loan, before monthly compounding.
Loan term
How long the purchase loan runs.
Lease payment
The monthly rental quoted for the lease.
Lease payment due at signing
Any upfront rental, acquisition fee or deposit paid when the lease starts.
Lease term
The comparison period: both options are measured over this many months.
Car value at the end
What you could sell the car for at the end of the lease term.
CALCULATOR QUESTIONS
Auto loan vs lease calculator questions
Is leasing always cheaper per month?
Almost always, because you are paying for depreciation rather than the whole car. The question is what it costs over the period.
Which is cheaper in the example?
Buying: £16,187.83 net cost against £16,364 for the lease, a difference of £176.17.
What if I keep the car longer?
The loan becomes cheaper over time, because payments stop and you still own the car. The lease comparison only holds for the lease term.
Are lease mileage charges included?
No. Add any expected excess mileage or damage charges to the lease cost before comparing.