A paid-off car belongs to you and carries no loan payment. At the same time, the capital used for it is unavailable for other purposes during the holding period.
The foregone benefit of another use for that money is the opportunity cost.
The comparison therefore represents another use of the capital as an adjustable return assumption.
Tied-up Capital in the Comparison
A cash purchase carries no loan interest. In return, the purchase amount is unavailable as savings or an investment during the ownership period. An assumed return represents this difference in the model.
The vehicle itself typically loses value. An alternative investment may generate returns, but it can also fluctuate or lose value. The return is therefore an assumption, not guaranteed income.
Comparison Using Fixed Assumptions
The following scenario compares a cash purchase and leasing over 36 months. It includes maintenance, depreciation, an assumed investment return and tax on investment gains.
Assumptions:
- Car List Price: €50,000 (Purchase Price €45,000 thanks to 10% discount)
- Starting Capital for both: €45,000
- Leasing Rate: €400 (Factor 0.8)
- Investment: 5% Return p.a. (pre-tax)
- Duration: 36 Months
- 1.€45,000 is used for the purchase.
- 2.Approx. €1,800 in maintenance is incurred over the term.
- 3.Assumed residual value after 3 years: approx. €25,800.
*Vehicle value minus paid maintenance costs.
- 1.€45,000 is invested at an assumed 5% return.
- 2.Lease payments (€14,400) and maintenance (€1,800) are paid from the capital.
- 3.The model applies approx. €6,000 in returns and €1,600 in tax on them.
Model result: Under these assumptions, final wealth with leasing and investment is approx. €9,250 higher.
What Determines the Difference
The gap follows from the assumptions for depreciation, return and leasing costs:
- Depreciation: The example assumes a fall from €45,000 to €25,800 over three years. A different residual value changes the result directly.
- Capital return: The model uses 5% per year. Actual returns are not guaranteed and may be negative.
- Lease terms: The calculation uses €400 per month, or a leasing factor of 0.8. Include any upfront payment and additional costs that apply.
- Monthly withdrawals: Lease payments and maintenance reduce the invested capital during the term and therefore the basis for future returns.
Important for the comparison: Return, residual value, tax and withdrawals act at the same time. Carculated brings these assumptions together in a model that you can adjust to your situation.
Conclusion: The Assumptions Decide
In this example, leasing with a parallel investment comes out ahead. This is not a general verdict: a different residual value, lower return or higher leasing costs can change the order. Compare the concrete offer and several realistic scenarios.
Note: The example above is a model calculation. Real results depend on market performance, inflation, and individual tax rates.