2026 Car Lease vs Installment vs Cash - Total Cost Comparison Calculator

Key Takeaway For a 50 million won vehicle held for 5 years, total cost ranks as follows: cash purchase about 32 million won < installment plan (60 months) about 36 million won < operating lease about 38 million won. However, for corporate business owners, operating leases can be fully expensed, creating a large pre-tax savings effect. For individuals, cash or low-interest installment financing is generally more favorable.

Bottom line: For a 50 million won vehicle, a cash purchase is the cheapest at 32 million won.

Overview of the 4 Ways to Buy a Car

Detailed Comparison by Method

Cash Purchase

The simplest method. Only acquisition tax (about 7% of the vehicle price) and registration fees are added.

When buying a 50 million won vehicle in cash:

차량 가격:    50,000,000원
취득세(7%):   3,500,000원
등록비 등:    약 500,000원
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총 초기비용:  54,000,000원

5년 후 중고차 가치(잔존가치 약 40%): 약 20,000,000원
5년 보유 실질비용: 54,000,000 - 20,000,000 = 34,000,000원

Pros: No interest burden, full ownership, free to modify or resell as a used car Cons: Requires a large upfront cash payment, bears the full depreciation loss

Installment Plan

Paying in installments through a bank or captive finance company. As of 2026, standard installment interest rates are generally around 4-8% per year.

Calculation for a 50 million won vehicle on a 60-month installment plan (6% annual interest):

차량 가격:    50,000,000원
취득세 등:    약 4,000,000원
선수금(20%):  10,000,000원
할부원금:     40,000,000원

월 납입금 계산:
 → 월 이율: 6% ÷ 12 = 0.5%
 → 월 납입금: 약 773,000원
 → 60개월 총 납입금: 약 46,400,000원
 → 이자 총액: 약 6,400,000원

5년 총비용:
 선수금 10,000,000 + 할부 46,400,000 + 취득세 4,000,000 = 60,400,000원
 - 잔존가치 20,000,000원
 = 실질 총비용 약 40,400,000원

Pros: You acquire ownership while preserving cash liquidity Cons: Interest burden, acquisition tax applies, possible early repayment penalty

Operating Lease (Favorable for Sole Proprietors and Corporations)

This works like renting the vehicle. Ownership remains with the leasing company, and the vehicle is returned when the contract ends.

Based on a 48-month operating lease for a 50 million won vehicle:

보증금(30%):  15,000,000원 (계약 종료 시 반환)
월 리스료:    약 700,000~850,000원
잔존가치:     없음 (계약 종료 후 반납)

4년(48개월) 총 리스료: 약 33,600,000원~40,800,000원
실질 납입 총액: 약 33,600,000원~40,800,000원 (보증금 반환 가정)

Tax benefits for corporations/sole proprietors:

• Monthly lease payments → fully expensable (corporate income tax and income tax savings)
• For annual lease payments of 8 million won, at a 22% corporate tax rate → annual tax savings of 1.76 million won

What about individuals?

• No acquisition tax (advantage)
• Cannot expense payments (disadvantage)
• No vehicle after the contract ends → a new contract is needed

Pros: No acquisition tax, low upfront cost (deposit only), corporate expense treatment Cons: No ownership, annual mileage limit, large early termination penalty

Finance Lease

Although it is a lease, you can acquire ownership by paying the residual value at the end of the contract.

특징:
- 계약 종료 후 잔존가치(통상 차량가의 20~30%) 납부 → 소유권 이전
- 또는 반납 후 재계약
- 할부와 운용리스의 중간적 성격

5-Year Total Cost Comparison Table for a 50 Million Won Vehicle

Note: Actual figures vary depending on interest rates and residual value rates. Corporate tax savings are not included.

Recommended Method by Situation

💡 Calculate your monthly payment yourself! Enter the installment principal, interest rate, and term in the Loan Interest Calculator to instantly calculate your monthly payment and total interest.

📣 Compensation Disclosure: This post is educational content intended to help with car purchase decision-making. It does not recommend any specific financial institution, leasing company, or car brand, and no advertising fees were received. Please compare rates from each financial institution directly before signing an actual contract.

Frequently Asked Questions (FAQ)

Q1. How much is the early termination penalty for an operating lease? A. In general, 10-30% of the remaining lease payments is charged as a penalty. The earlier you are in the contract, the larger the penalty tends to be, and some products calculate it as a set percentage of the remaining months x monthly lease payment. Be sure to check the early termination terms before signing.

Q2. How much tax can a corporate operating lease actually save? A. At a 22% corporate tax rate, annual lease payments of 10 million won can reduce corporate tax by 2.2 million won. Over 5 years, cumulative savings can exceed 10 million won, making operating leases highly advantageous for corporations from a tax perspective.

Q3. What happens if I exceed the annual mileage limit on an operating lease? A. Most contracts are based on 20,000-30,000 km per year, and excess mileage typically incurs an additional charge of 60-100 won per km. If you drive more than 30,000 km per year, an installment plan or cash purchase may be more favorable than a lease.

Q4. Can I freely transfer a vehicle purchased through an operating lease to someone else? A. No. With an operating lease, ownership belongs to the leasing company, so title transfer or arbitrary assignment is not allowed. If someone other than the contracting party will drive the vehicle long-term, you should choose a finance lease or installment plan.

Q5. Are there cases where an installment plan or lease is better even if I have cash? A. Yes. If you can invest your cash at an annual return of 7% or more, the investment return may exceed installment interest of 4-5%, making installment financing more favorable. For corporations, operating lease tax savings from expense treatment can also exceed the interest cost.

Q6. Is it always better to make a larger down payment on an installment plan? A. A larger down payment does reduce the monthly payment and total interest, but the down payment also creates an investment opportunity cost. If your cash return is higher than the installment interest rate, reducing the down payment may actually be more advantageous.

Q7. Should electric vehicles and hybrids be compared in the same way? A. The basic comparison method is the same, but electric vehicles have subsidies (national and local government) and acquisition tax reductions, so the effective cost differs. Also, EV residual value rates may be lower than those of internal combustion engine vehicles, so larger depreciation should be considered when buying in cash.

Q8. Are leases or installment plans available for used cars too? A. Yes. However, used car leases have higher monthly lease payments than new car leases, and residual value calculations are more complex. In general, captive finance installment plans are the most common for used cars, and they usually apply to vehicles that are 5 years old or newer with mileage of 100,000 km or less.

Reference: KOSIS National Statistical Portal