What is PCP car finance?

Personal Contract Purchase (PCP) is the most popular UK car finance option. You pay lower monthly instalments with a large optional final payment (balloon) to own the car, or you can return it and start a new deal.

What are the tax implications of leasing vs buying for a business?

UK businesses can claim lease payments as a deductible expense, while purchased vehicles are claimed through capital allowances. The best option depends on the vehicle's CO2 emissions and your business structure.

What happens at the end of a car lease?

At the end of a UK car lease (PCH), you return the vehicle. You may face excess mileage charges or damage fees if the car is not in fair condition. There is no option to purchase the car.

How much deposit do I need for a car lease?

UK car lease deposits are typically 3, 6, or 9 months' worth of payments upfront. A larger initial payment reduces your monthly cost but increases the amount at risk if the car is written off.

Lease vs Buy Calculator UK

Useful next calculations

Use the Car Loan CalculatorContinue with the related car & transport question this result raises.
Use the Car Depreciation CalculatorContinue with the related car & transport question this result raises.

Rates and sources

SDLT/LTT/LBTT bands vary between England, Wales, Scotland and Northern Ireland. Use the appropriate calculator.

Source: HMRC / Welsh Revenue / Revenue Scotland. Check the linked guidance and any live quote before acting.

When to use this calculator

Before buying, renting, refinancing or reviewing a property investment.
When you want to compare cash flow, tax, yield or ownership costs.
When you need a fast estimate before speaking to an agent, lender or adviser.
When you want to see how a rate or price change moves the result.

A worked example

These are the example figures the calculator opens with.

A worked example
Input	Value
Vehicle Price (£)	£25,000
Monthly Lease Payment (£)	£350
Lease Term (Years)	3 years
Loan Interest Rate (%)	6%

For those figures the calculator returns:

Total lease cost: £12,600.00
Total buy cost (net): £18,999.20
Monthly lease: £350.00
Monthly loan: £483.32
Lease vs buy difference: -£6,399.20

Method & assumptions

This calculator compares the total financial cost of leasing (renting) a property against purchasing it on a leasehold or freehold basis over a chosen time horizon. For leasehold purchases, the model includes estimated service charges and ground rent alongside mortgage costs. For freehold, it includes maintenance reserves. The leasing scenario assumes rent increasing annually at your specified rate. The calculator does not predict property value changes or lease extension costs, both of which are highly property-specific. It is intended to provide a structured framework for comparing the two routes rather than a precise financial forecast. Before purchasing any leasehold property, obtain a full set of service charge accounts and take independent legal advice on the lease terms.

Common mistakes

Comparing rent and ownership costs without including taxes, fees and maintenance.
Using purchase price alone without testing financing or vacancy assumptions.
Relying on yield or growth in isolation instead of reviewing the full property case.
Using the wrong national transaction-tax calculator for the purchase location.

What to do next

Run a second scenario with a higher rate or lower rental yield.
Compare the result with a buy-versus-rent or mortgage calculator before making an offer.
Use the matching national transaction-tax calculator for the purchase location.
Note the key figures to share with your solicitor or lender.

Questions people ask

Leasing suits those who want a new car every few years with lower monthly payments and no depreciation risk. Buying is better if you plan to keep the vehicle long-term, as you build equity and eventually own it outright.