Does this calculator show which option is better financially?

The tool shows which option has a lower total cash outlay over the specified terms. It does not account for ownership equity, tax benefits, opportunity cost, or personal circumstances. Lower total cost may not mean better financial outcome depending on individual goals and the time value of money.

Why doesn't the calculator include interest rates?

The tool compares contracted monthly payments directly, so the interest rate is already embedded in those payments. Users enter the actual monthly amount they would pay under each contract, making separate interest-rate inputs unnecessary for a total-cost comparison.

What is the lease-end buyout field for?

Many leases offer the option to purchase the vehicle at contract end for a predetermined residual value. Entering that buyout amount allows comparison of lease-to-own versus direct financing, showing the total cost if the lessee exercises the purchase option.

Can I compare different loan and lease terms?

Yes. The calculator accepts any term length for each option, enabling comparison of a 60-month loan against a 36-month lease, for example. Differences in term length affect total cost but not the arithmetic method used.

Does this tool account for mileage limits or wear charges?

No. The calculator sums contractual payments only. Lease mileage penalties, excess wear fees, disposition charges, and early termination costs are not included. Users should factor those potential costs separately when evaluating lease contracts.

Cost of Ownership

Loan vs Lease Comparison

Compare total cost of buying on finance versus leasing over different terms and buyout scenarios.

Last updated: 18 May 2026

What this tool does

This calculator compares the total cost of a car loan versus a lease by multiplying each monthly payment by its respective term, then adding any lease-end buyout amount. Primary inputs are loan monthly payment, loan term (months), lease monthly payment, lease term (months), and optional lease buyout amount. The output shows the absolute cost difference and identifies which option costs less over the specified periods.

Inputs

Result

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Lease vs Buy Financial Comparison

Financing & Purchase

Compare total lease cost against financed-purchase net cost over matching or differing terms.

Formula

Difference = (P_{L} \times N_{L}) - (P_{L e} \times N_{L e} + B)

P_{L}

Loan monthly payment (£)

N_{L}

Loan term (months)

P_{L e}

Lease monthly payment (£)

N_{L e}

Lease term (months)

B

Lease-end buyout amount (£)

How Loan vs Lease Comparison works

This tool multiplies each monthly payment by its term to calculate total outlay. For a loan, the total equals the monthly payment times the number of months. For a lease, the total equals the monthly payment times the lease term plus any end-of-lease buyout amount. The calculator then subtracts the lease total from the loan total to show which option costs less and by how much.

The formula

Loan total = loan monthly payment × loan term (months)
Lease total = (lease monthly payment × lease term) + lease buyout
Difference = loan total − lease total

A positive difference means the lease costs less; a negative difference means the loan costs less. The absolute value of the difference is displayed as the primary result.

Where this method is most accurate

This comparison assumes the monthly payments and buyout amounts entered reflect the actual contracted figures. It does not account for the time value of money, opportunity cost of capital, tax treatment differences, maintenance inclusions, mileage penalties, or residual value fluctuations. The calculation is most meaningful when comparing contracts with similar down payments and ancillary terms. For leases with purchase options, including the buyout amount allows direct comparison against owning via a loan.

What this tool does not do

The calculator does not compute interest rates, determine residual values, estimate depreciation, or factor in jurisdiction-specific taxes, registration fees, or insurance costs. It does not evaluate mileage allowances, wear-and-tear charges, early termination penalties, or the equity position at contract end. The tool provides a simple sum-of-payments comparison; it does not constitute financial advice or recommend one financing method over another.

Disclaimer

This calculator is an educational tool that performs arithmetic on user-supplied inputs. It does not provide financial, legal, or vehicle-purchase advice. Actual costs vary by lender, lessor, jurisdiction, and individual contract terms. Users should review all contract documents and consult qualified professionals before making financing decisions.

Questions

Does this calculator show which option is better financially?: The tool shows which option has a lower total cash outlay over the specified terms. It does not account for ownership equity, tax benefits, opportunity cost, or personal circumstances. Lower total cost may not mean better financial outcome depending on individual goals and the time value of money.
Why doesn't the calculator include interest rates?: The tool compares contracted monthly payments directly, so the interest rate is already embedded in those payments. Users enter the actual monthly amount they would pay under each contract, making separate interest-rate inputs unnecessary for a total-cost comparison.
What is the lease-end buyout field for?: Many leases offer the option to purchase the vehicle at contract end for a predetermined residual value. Entering that buyout amount allows comparison of lease-to-own versus direct financing, showing the total cost if the lessee exercises the purchase option.
Can I compare different loan and lease terms?: Yes. The calculator accepts any term length for each option, enabling comparison of a 60-month loan against a 36-month lease, for example. Differences in term length affect total cost but not the arithmetic method used.
Does this tool account for mileage limits or wear charges?: No. The calculator sums contractual payments only. Lease mileage penalties, excess wear fees, disposition charges, and early termination costs are not included. Users should factor those potential costs separately when evaluating lease contracts.

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Sources & Methodology

The tool calculates loan total = monthly payment × term (months) and lease total = (monthly payment × term) + buyout, then subtracts lease from loan to show the cost difference. This is a straightforward total-payments comparison. The method does not discount future cash flows or apply present-value adjustments.

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