2026 Car Lease vs Installment vs Cash — Total Cost Comparison

**Cons:** Large upfront capital required, full depreciation exposure --- ### Installment (Hire Purchase) With an installment plan, the purchase is financed through a bank or capital company. Typical 2026 rates are around ~4–8% annually. **KRW 50M vehicle, 60-month installment at 6%:** ```
Vehicle price: KRW 50,000,000
Acquisition tax: KRW 4,000,000
Down payment (20%): KRW 10,000,000
Financed amount: KRW 40,000,000 Monthly rate: 6% ÷ 12 = 0.5%
Monthly payment: ~KRW 773,000
Total installment payments: ~KRW 46,400,000
Total interest: ~KRW 6,400,000 5-year total:
Down KRW 10M + Installments KRW 46.4M + Tax KRW 4M = KRW 60.4M
Less residual value: –KRW 20M
Net 5-year cost: ~KRW 40,400,000

- Monthly lease payments are fully deductible as a business expense
- For KRW 8M annual lease payments at 22% corporate tax rate → KRW 1.76M annual tax saving **For individuals:**
- No acquisition tax (advantage)
- No expense deduction (disadvantage)
- No vehicle at contract end — you must lease again **Pros:** No acquisition tax, low initial outlay (deposit only), full expense deduction for businesses
**Cons:** No ownership, annual mileage cap, large early termination penalty --- ### Financial Lease A financial lease gives you the option to buy the vehicle at the end of the contract by paying the residual value. ```
Key feature:
- At contract end, pay residual value (typically 20–30% of vehicle price) to acquire title
- Or return vehicle and re-lease
- Hybrid between installment and operating lease