Own or lease? Deciding with monthly equivalent cost

This question is usually argued with the wrong comparison. There is a lease quote on one side and the purchase price of the vehicle on the other — one monthly figure, one lump sum — and the conclusion is either "leasing is expensive" or "buying makes sense". Two numbers that have not been made comparable produce no conclusion at all.

A proper comparison needs ownership expressed as a single monthly line too. That is the monthly equivalent cost. Below is how it is built, which lines belong in the comparison and which have to stay out, and what to watch for when reading the result.

Why can a purchase price not be compared with a lease rate?

Because the lease rate is the monthly price of a service package, while the purchase price is the vehicle alone. Servicing, tyres, insurance and the replacement vehicle inside the lease invoice are all paid separately on the ownership side, and usually never make it into the table.

What an operating lease quote typically includes:

• Scheduled servicing and consumables
• Tyre replacement, within the counts and seasons written into the contract
• Insurance
• Road tax and registration
• A replacement vehicle during breakdown or repair
• Residual value risk — disposing of the vehicle is the lessor's problem

What is usually not included: fuel, tolls, traffic fines, charges for exceeding the contracted mileage, and damage excesses. Verifying that split line by line against the contract is the most important step in the whole exercise, because a comparison only works with items present on both sides.

How do you build the monthly equivalent cost of ownership?

By reducing every line that comes from ownership to a monthly figure and adding them. Annual items are divided by twelve; depreciation is divided by the months you plan to keep the vehicle.

Three of the four lines are easy to source. The difficult one is the repair share: without historical records this row usually gets written as zero, which makes ownership look cheaper than it is. If you do not know how many times the vehicle went into the workshop over the past year, or how much was paid outside the insurance policy, that record has to be pulled before the calculation.

The second difficulty is the estimated residual value. In markets where used prices can rise in nominal terms, a generic assumption such as "15% depreciation a year" does not describe reality for some vehicle classes. Recent used listings for your own vehicle class are the soundest input you can put in the table.

A worked comparison

Illustrative scenario: a diesel van planned for four years, against an operating lease quote of ₺11,500 a month excluding VAT for the same class.

Ownership is ahead in this table. But put the same vehicle on construction sites, so that the repair share is ₺2,400 instead of ₺600, and the monthly equivalent rises to ₺11,583 — the two options are effectively level. What changes the decision is not the vehicle but how it is used.

How large does the gap need to be to matter?

A practical rule: if the two figures are within 10% of each other, the cost table does not decide. A gap inside that band is smaller than the uncertainty in the estimates.

The reason is the two estimated lines in the table: residual value and repair share. Both contain assumptions about the future, and a 10% error is entirely plausible in either. If the gap falls inside that band, the answer lies outside the table.

Four factors the table does not hold

The cost calculation is half the decision. The other half is these headings, which never become numbers but do change the answer:

• Tied-up capital. The money paid for the vehicle could have been working elsewhere. Where the cost of capital is high, ownership's advantage in the table is smaller in reality.
• Flexibility. If workload varies, being able to shrink the fleet at the end of a contract carries a value the cost table does not show. Under ownership, shrinking means selling.
• Residual value risk. With ownership the company carries the used market risk; with leasing the lessor does. How much that is worth to you is a preference, not a number.
• Administrative load. Service bookings, inspection dates, insurance renewals and damage claims stay with the company under ownership. That load has a cost, usually paid as somebody's time.

How often should the decision be revisited?

The monthly equivalent of ownership is not a fixed number; it moves with the age of the vehicle. Depreciation shrinks over time while the repair share grows. A table that favoured ownership in the early years can quietly reverse after year four — and, because nobody recalculates, go unnoticed.

A practical rhythm is to repeat the calculation once a year, at insurance renewal. The premium has just been updated, the last twelve months of repair records are at hand, and used prices can be checked at the same moment. Run the same table across the whole fleet and the replacement queue emerges on its own.

The only real difficulty here is that the four lines live in four different places: the policy in a folder, the workshop invoice in accounts, the odometer with the driver, the used price on a listings site. What delays the decision is rarely the arithmetic — it is that bringing those four records into one table is a fresh piece of work every time.