Total cost: lease vs buy with a loan.
Cheaper option
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Buy: net cost
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Lease: total cost
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The real question behind lease versus buy
Most lease-versus-buy comparisons fail because they stack a monthly lease payment against a monthly loan repayment and stop there. That ignores the single biggest financial fact about a car: when you buy it, you still own an asset at the end. A lease is pure expense, money out the door with nothing left in your driveway. So the honest comparison is not payment against payment, it is the lease total against the net cost of buying once you credit back what the car is worth when the loan is done. This tool does exactly that, and it deliberately compares cash cost only, leaving tax aside so the underlying economics are clear.
How the buy side is built up
On the buy side the calculator finances the price less your deposit using a standard amortising loan formula, the same maths a bank uses, where each repayment covers interest on the shrinking balance plus a slice of principal. It totals every repayment across the term, adds your upfront deposit, then subtracts the resale value you expect to keep. The lease side is simpler: the monthly lease payment multiplied by the number of months. Whichever total is lower wins, and the tool reports the gap in dollars.
A $45,000 car over five years
Run the defaults: a $45,000 car, a $5,000 deposit, an 8.5 percent loan over five years, an expected resale of $18,000, against a lease of $750 a month. The $40,000 loan repays at about $821 a month, so the repayments total roughly $49,240. Add the deposit and subtract the $18,000 resale, and the net cost of buying is about $36,240. The lease costs $750 times 60, or $45,000. Buying comes out about $8,760 cheaper, and crucially that $18,000 of resale value is the reason.
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The chart puts the two totals side by side. The buy bar carries a resale credit that the lease can never have.
Where leasing still wins
The cash answer usually favours buying, but it is not the whole story, and this is where judgement matters. A lease can win on cash flow if you need a vehicle now and cannot tie up a deposit. More importantly, in Australia a novated lease through salary packaging changes the tax picture entirely, because repayments and running costs come out of your pre-tax salary, and for an eligible electric vehicle the fringe benefits tax exemption can make packaging dramatically cheaper than this cash comparison suggests. If the car is used for work, those tax effects can flip the result, so treat this tool as the pre-tax baseline and then layer the packaging benefit on top.
The number people guess wrong
The result is extraordinarily sensitive to the resale value you assume, and that is the input people fudge. A car that holds value, a popular dual-cab or a Toyota hybrid, might keep half its price after five years, which tilts hard toward buying. A fast-depreciating European prestige model might be worth a third, narrowing the gap. Before trusting the output, check recent sold prices for the same make, model and age rather than the optimistic figure a dealer quotes.
Common questions
Does this tool include servicing, insurance and registration?
No. It compares finance cost only. Those running costs are broadly similar whether you lease or buy a comparable car, so leaving them out keeps the comparison clean. The exception is a fully maintained novated lease, which bundles running costs into the payment, so compare like with like if you go that route.
What if I keep the car well beyond the loan term?
Buying then wins by even more. Once the loan is repaid you drive for years at zero finance cost while still owning the asset, whereas a lease keeps charging every month. The longer your typical ownership horizon, the stronger the case for buying.
Should I just pay cash instead of taking a loan?
If you have the cash and no higher-interest debt, paying outright avoids the interest entirely and almost always beats both options modelled here. The loan exists in this tool because most buyers finance at least part of the price, but the cheapest path of all is owning the car free of any finance.