Leasing vs Buying: What is the best way to pay?

Should I lease or buy a car? The complete cost comparison 2025

Car leasing is typically better for most UK drivers.

Leasing costs on average £200 to £600 monthly with no large upfront payment, while buying new requires £15,000+ initially, plus depreciation losses of 40-60%. Leasing tends to work out cheaper if you drive under 15,000 miles annually and want a new car every two to four years. Buying is better if you drive over 15,000 miles yearly or keep your cars beyond the five-year mark.

But there’s more to consider than just your monthly costs, including tax benefits, maintenance, and your driving habits.

Here’s how to decide which option is going to be best for you – and save you the most cash.

*Prices used as an example, and might not be representative of your experience

How much does it cost to lease vs buy a car?

Leasing averages £350-£400 a month, or £12,600-£14,400 over three years for most drivers.

Buying, on the other hand, costs an average of £25,000 to purchase outright, plus you’ll need to factor in depreciation when selling the vehicle.

The cost difference? In that scenario, leasing could save you over £8,000 over three years for most drivers.

What are the benefits of leasing a car?

There are loads of benefits when it comes to car leasing, including:

• No large upfront payment needed
• Predictable monthly costs (with the option to add a maintenance package)
• Always drive a newer, more reliable car
• No depreciation risk – cars lose 40-60% value in the first four years
• Tax benefits for business lease deals (100% deductible if used solely for business)
• Warranty coverage for most of, if not all of, your lease term

What are the benefits of buying a car?

Buying has its perks too – it all depends on your personal circumstances. The benefits of buying include:

• No mileage restrictions
• Freedom to modify the vehicle
• Build equity (although cars depreciate rapidly)
• No early termination fees
• You can keep the car as long as you want

Should you lease or buy?

If you’re a private driver who’s not racking up thousands of miles every year, likes driving something new and safe, and isn’t fussed about ownership, then leasing could be the answer.

You’ll get to drive a new car with a full warranty, giving you peace of mind – and you could even save money.

Not just on your monthly payments, but on repair bills with optional maintenance packages, plus MOTs (a new car doesn’t need one until it’s three years old).

For business owners, business leasing offers 100% tax relief on monthly payments if you use the car solely for business purposes – 50% if you also use it for personal journeys – plus VAT reclaim.

If you opt for an electric car lease, you can save on your Benefit in Kind (BiK) tax, with EVs qualifying for the lowest rates. Even hybrids tend to work out cheaper, keeping more of your hard-earned cash in your pocket.

However, if you’re a high-mileage driver and regularly travel over 15,000 miles yearly, then buying might be better.

While our lease deals allow you to select an annual mileage limit of 30,000 (meaning a total of 90,000 miles over a three-year deal), these cost more. If you exceed your limit, you’ll pay excess mileage fees of 5-25p per mile.

Got decision fatigue? Let us help.

Choose leasing if:

• You drive under 15,000 miles annually
• You prefer predictable monthly costs
• You want a new car every two to four years
• You’re a business owner (tax benefits)
• You don’t want to shoulder the depreciation risk
• You like having warranty coverage

Choose buying if:

• You drive over 15,000 miles annually
• You like to keep cars for five+ years
• You want unlimited modifications
• Mileage restrictions concern you
• You prefer ownership

FAQs

Is buying or leasing cheaper?

Leasing is typically cheaper monthly than buying with finance. Over three years, leasing averages £12,600 vs buying costs of £20,000+ (including depreciation).

Can I buy my lease car at the end?

Most lease agreements don’t include purchase options. Instead, you hand the car back and can take out a new lease deal on a brand-new car, meaning you’ll always drive the latest models with the most up-to-date tech.

What happens if I exceed my mileage on a lease?

Excess mileage charges range from 5-25p per mile, depending on the vehicle and your funder. Factor this into your decision – high-mileage drivers might find buying more economical.

Do I own anything when leasing?

No, leasing is basically a long-term rental. You return the car at the end with no equity. However, you also avoid depreciation losses of £8,000-£15,000 that buyers face, and you don’t have to deal with the hassle of reselling.

Can I lease a car with bad credit?

Yes, you can lease a car with poor credit, though your options may be more limited. If you’re concerned about your credit score, you can talk to our expert team, who will be able to guide you in the right direction.