Head to head
Leasing vs Buying: Which Is Cheaper?
Rent the car forever or own it — leasing versus buying compared on the true cost.
Leasing has the lower monthly cost, but buying — outright or on finance — is usually cheaper over the long run because you end up owning an asset.
Leasing keeps the monthly payment low, but buying the car usually costs less over the long run because you end up owning it. Leasing is an ongoing rental; buying turns payments into an asset you can keep or sell.
If you always want a newer car and predictable costs, leasing fits. If you keep cars for years, buying almost always wins on total cost — and the gap widens the longer you keep the car after it's paid off.
Leasing vs buying at a glance
Leasing means paying forever for use; buying means paying until you own the car outright. Over many years, owning costs less because the payments end.
A lease never ends in ownership — the moment you stop paying, you have no car. Buying, whether outright or with HP or a loan, ends with the car yours and the payments gone. The fundamental difference is that a lease is a service (use of a car) and buying is an asset purchase, and assets stop costing you money once they're paid off.
This is why the comparison flips over time. Over a single 3-year lease term, the lease can look competitive — lower monthly, no resale hassle, a new car. Over 8 or 10 years of continuous driving, buying wins comfortably, because the buyer spends years driving a paid-off car while the leaser keeps paying rent indefinitely.
| Leasing (PCH) | Buying (cash or finance) | |
|---|---|---|
| Monthly payment | Lower (≈ £280–350) | Higher, or £0 if cash |
| Long-run cost | Never stops | Stops once paid off |
| Own the car? | No, ever | Yes |
| Mileage limits? | Yes, with excess charges | None |
| Condition charges? | Yes, beyond fair wear and tear | None |
| Always a new car? | Yes, every 2–4 years | No, you keep what you bought |
| Best for | Always new, fixed budget | Keeping it long, lowest total |
Worked example: leasing vs buying over the long run
Buy a £20,000 car on HP and you pay about £452 a month for 48 months, then nothing — and you own it. Lease the equivalent and the payments never stop.
Leasing can still make sense if you value a new car every few years and a fixed, all-in budget that includes a warranty and no resale hassle. But on pure total cost — which is what this calculator site is about — owning a car you keep is hard to beat. Check the buying side on the HP or car loan calculator and the renting side on the leasing calculator.
Worked example
Who each option suits
Lease if you always want a newer car and tidy monthly costs; buy if you keep cars long and want the lowest total.
- Lease (PCH) if: you change car every 2–4 years, want a predictable monthly that includes a warranty, and don't mind never owning.
- Buy if: you keep cars for years, drive high or variable mileage, or want to stop paying once it's yours.
- Buying cash avoids interest entirely — but compare the true cost against a 0% or low-rate deal first, because keeping your cash may be worth more than the interest you'd save.
Pros and cons: leasing vs buying
Leasing wins on monthly and the always-new convenience; buying wins on long-run cost and ownership.
| Pros | Cons | |
|---|---|---|
| Leasing (PCH) | Lowest predictable monthly, always a new car, no resale hassle | Never own, no equity, mileage and condition charges, payments never end |
| Buying | Own outright eventually, no mileage limits, cheaper long-run, sell anytime | Higher monthly, responsible for repairs once warranty ends, depreciation is yours |
Depreciation: who eats the loss?
Depreciation is baked into both routes — leasing bakes it into the rental, buying leaves you holding it directly. The question is which you'd rather pay for.
When you lease, the leasing company has already calculated the car's expected depreciation over the term and priced your rentals to cover it, plus a profit margin. If the car holds its value better than expected, the leasing company keeps the upside; if it depreciates faster, they take the loss. You've paid a fixed rental either way.
When you buy, the depreciation is yours. A car that holds its value well costs you less in real terms because you recover more when you sell; a car that depreciates steeply costs you more. This is the hidden risk of buying — but it's also the hidden opportunity, because a buyer who picks a car that holds its value can do far better than the lease route, while a buyer who picks a heavy depreciator can do worse.
Run the car's expected resale value through the total cost of ownership calculator before you commit. A 'depreciation-proof' car bought and kept for 8 years can halve the effective cost per year compared with leasing the same car continuously. Conversely, a rapid depreciator can close the gap with leasing and erase the buyer's advantage.
What about buying used vs leasing new?
Buying a used car outright or on finance often beats both leasing new and buying new, because someone else has taken the steepest depreciation hit.
A 2–3 year old used car has already lost 30–50% of its new price, so you're buying the same car for substantially less — and the depreciation curve from there is much gentler. Finance it on HP or a loan, keep it for years, and the total cost can be dramatically lower than continuous leasing of new cars, with ownership at the end.
The trade-off is repair risk: a used car is more likely to need work, and may be out of warranty. The lease's warranty coverage is a real benefit if you'd otherwise face big bills. But for buyers who keep cars long and pick models with strong reliability records, buying used is usually the cheapest route of all — see new vs used finance and used car finance deals for the full maths.
The three-quote rule and how to negotiate either route
Whichever route you lean towards, get at least three written quotes — one from the dealer, one from a broker, and one from a bank or online lender — because the spread between best and worst is often thousands of pounds.
On the buying side, the same car can be priced differently by the dealer's finance arm, a high-street bank, and a specialist online lender, because each sets its own APR and deposit rules. Ask each for the total amount payable, not just the monthly, and put those totals side by side. Dealers sometimes match a cheaper outside quote to keep the sale, so a broker's figure is a useful lever even if you end up financing with the dealer.
On the leasing side, get quotes from at least two leasing brokers and the manufacturer's own finance arm, because the headline monthly hides differences in the initial rental, the mileage allowance, and the excess-mile rate. A lease that's £20 cheaper a month but charges double for excess miles can cost more overall if your mileage creeps up. Read the small print on the initial rental (often 3, 6, or 9 months upfront) and the documentation fee, because both inflate the true first-year cost.
If you finance to buy and later want out, regulated HP and PCP carry a statutory early-settlement right with a rebate of interest under the Consumer Credit Act 1974 — you don't pay the full term's interest if you settle early. Leases have no equivalent: getting out of a lease early usually means paying most of the remaining rentals, sometimes with a penalty, which removes one of buying's few flexibilities.
Work out your own numbers
Compare the lease monthly against the cost to buy and own — over the years you'll keep the car, with depreciation factored in.
Run buying on the HP calculator or car loan calculator and leasing on the leasing calculator, then weigh each on true APR and interest. Add depreciation and resale value on the total cost of ownership calculator so the comparison reflects what you'll actually recover. The longer you plan to keep the car after paying it off, the more buying wins — and if you'd only ever lease, run the 8-year total to see how much the never-ending rent really costs.
Frequently asked
Is it cheaper to lease or buy a car?
Do you own the car if you lease it?
When does leasing make more sense than buying?
Does leasing have mileage limits?
Is it ever cheaper to lease than buy?
What about buying with cash vs leasing?
Does leasing include insurance and maintenance?
Can I get out of a lease or a finance agreement early?
How many quotes should I get before leasing or buying?
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