New or used car on lease: what you should consider

The question of whether to lease a new or used car seems simple until you start doing the calculations. Most people look only at the monthly payment — and that's where the biggest trap lies. I always recommend calculating the total cost of ownership rather than just the monthly payment. Let's break it down step by step.

Car leasing is a financial instrument whose mechanics are worth understanding before choosing between a new and a used vehicle. After all, the terms of the agreement determine whether these two options can be compared fairly.

Financial leasing in Ukraine is regulated by the relevant law and is essentially a form of long-term asset rental with the right to purchase: the leasing company buys the car, you use it in exchange for regular payments, and you acquire ownership at the end of the lease term. Legally, the lessor remains the owner throughout the agreement, and ownership is transferred to you only after all payments have been made. ,

The key difference lies in ownership and the vehicle purchasing process. With a car loan, the customer signs a purchase agreement directly and immediately becomes the owner, while the vehicle serves as collateral. You must also register and insure the car yourself and pay all registration fees, including the pension fund contribution if it is the vehicle's first registration. When purchasing a car through leasing, the lessor remains the owner until the agreement's terms have been fulfilled. This directly affects registration procedures at the Ministry of Internal Affairs service centres: the car is initially registered in the leasing company's name and is only re-registered in your name after all payments have been completed.

In some cases, a lessor's requirements for a customer may differ from those imposed by a bank when issuing a car loan.

A leasing payment consists of several components:

• Down payment — a portion of the car's value paid upfront. The amount depends on the terms of the specific leasing programme.
• Repayment of the vehicle's value — the portion of each payment that gradually covers the car's purchase price over the agreement term.
• Lessor's remuneration or commission — includes interest for using the vehicle as well as reimbursement of all additional expenses incurred by the lessor when purchasing and registering the car (comprehensive CASCO insurance, compulsory motor third-party liability insurance, registration fees and other costs).

The terms can be adjusted to suit your budget. A larger down payment and shorter lease term reduce the total financing cost but increase the monthly financial burden. Conversely, a smaller down payment and longer term make monthly payments more affordable but increase the final cost of financing.

Leasing a new car is a financial option for those who want predictable expenses and do not plan to tie up a substantial amount of money in a vehicle. It allows you to acquire a new car with a relatively small initial payment, fixed instalments and minimal maintenance expenses during the first few years.

A new car generally carries a lower risk of unexpected repairs during its first years of use. It has no hidden wear and tear from a previous owner and no risk of unpleasant surprises after the first inspection. This means more predictable expenses during the initial years of ownership, making budgeting easier.

The warranty period and maximum mileage covered depend on the manufacturer and specific model, and the warranty often covers almost the entire standard lease term.

This means a clear division of responsibilities:

• Manufacturing defects and major breakdowns are repaired free of charge or at the authorised dealer's expense.
• Comprehensive CASCO insurance is a mandatory requirement for financial leasing, while the payment arrangements depend on the specific agreement.
• You are protected from the risk of having to pay for expensive replacement parts out of your own pocket.
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New engines and transmissions are generally more fuel-efficient. The savings may not be immediate, but they accumulate throughout the ownership period.

Not every financial situation calls for buying a brand-new car from a dealership. If your priority is to preserve available capital and obtain a vehicle with the lowest possible monthly impact on your budget, leasing a used car is a good alternative.

The average price of a used car in Ukraine is currently around $6,000–6,500, significantly less than the price of a new car from a dealership. A lower vehicle price means a smaller down payment in hryvnia terms and therefore a lower entry threshold for those who do not have a large amount available upfront.

Since the calculation base (the car's value) is lower, the monthly payment is proportionally smaller, even with the same lease term and down payment percentage. This is particularly noticeable when comparing a 3–5-year-old leased vehicle with a new car in the same class.

The most important factor is the car's actual mileage, not the figure shown in the advertisement. According to market analysts, a noticeable proportion of used cars in Ukraine have had their odometers rolled back, sometimes by tens of thousands of kilometres. You should also check the leasing company's age restrictions for used vehicles (most set a maximum vehicle age at the end of the lease term), accident history and the CASCO insurance premium, including any additional charges due to the vehicle's age.

You should compare not only monthly payments but also warranties, insurance, repair risks and the available selection of models. Let's look at some approximate figures.

This is where the concept of the "total cost of ownership" becomes important: payments to the leasing company are only part of the actual expenses. The rest includes insurance, taxes and fees, maintenance and fuel — costs that are easy to underestimate when signing an agreement.

Full CASCO insurance is always mandatory for a leased vehicle because the car legally belongs to the lessor, who wants protection against potential losses. The approximate cost of CASCO insurance is 4–8% of the vehicle's value per year, depending on the make, age, registration region and chosen deductible. You will also need compulsory motor third-party liability insurance. From 2026, insurers in Ukraine set these premiums freely, without a fixed government rate. For example, the annual cost for a passenger car in Kyiv is approximately UAH 6,000, depending on engine capacity, region and the driver's history.

Vehicle registration, including the issuance of licence plates, costs approximately UAH 1,306 at a Ministry of Internal Affairs service centre. A separate pension fund contribution is payable upon the first state registration of a new vehicle, with the amount linked to the car's value. Leased vehicles have a particular consideration: the vehicle is initially registered in the lessor's name and transferred to the lessee only after all payments have been completed. Therefore, it is worth clarifying in the agreement who pays these fees and when.

For a new car, the first few years of use are generally covered by the warranty and scheduled servicing in accordance with the manufacturer's requirements. These are predictable and relatively modest expenses. For a used car, routine maintenance may be accompanied by hidden repair needs, such as replacing worn parts that the previous owner neglected. Set aside a separate budget for these costs rather than assuming that basic servicing will be sufficient.

Almost 80% of new cars in Ukraine are currently purchased as crossovers or SUVs, which generally means higher fuel consumption compared with a sedan or hatchback of the same brand. Used cars with high mileage may also consume more fuel due to engine wear or outdated technology. Before leasing a car, calculate the approximate fuel consumption of the specific model based on your typical annual mileage. A difference of just a few litres per 100 kilometres can add up to a substantial amount over a year.

The choice of leasing programme depends on who will use the vehicle — an individual or a company. For private customers, budget stability and a straightforward application process are important, while businesses may focus on tax optimisation opportunities. To make a cost-effective choice, consider the vehicle's intended use and the financing term.

For personal needs, the main criteria are a comfortable monthly payment with some financial flexibility (rather than stretching your budget to its limit), a realistic assessment of insurance expenses and convenient options for returning or purchasing the car at the end of the lease. If your credit history is less than perfect, leasing is generally a more accessible option than a bank loan.

For companies, leasing can be a convenient way to renew a vehicle fleet or purchase equipment without withdrawing the entire amount from working capital at once. However, businesses should compare not only standard leasing programmes but also available government support options.

For example, under the government programme "Affordable Financial Leasing 5–7–9%", businesses can obtain financing under the programme's specified conditions. However, eligible assets and financing purposes are subject to restrictions. In particular, passenger cars used for a company's everyday operations are not eligible under this programme.

We explain the current terms, requirements and restrictions of government lending and leasing programmes in 2026 in a separate article, "Terms and Requirements of Government Lending and Leasing Programmes 5–7–9% in 2026".

Therefore, before choosing a programme, you should first determine exactly which vehicle or other asset your business needs and only then compare the available financing options.

Lease terms typically range from 12 to 60 months. A longer term reduces the monthly payment but increases the total financing cost. A shorter term has the opposite effect: higher monthly payments but faster ownership transfer or vehicle replacement. Ideally, you should base your decision on how long you actually need that particular car, rather than focusing solely on a comfortable monthly payment.

A new car on lease is worth considering if a warranty, predictable expenses and minimal breakdown risks are important to you, and the monthly payment fits comfortably within your budget. A used car is a better option if your main priorities are a smaller down payment and lower monthly instalments. In that case, you should budget for potential repairs in advance and check the vehicle's history.

Whatever you choose, don't focus solely on the leasing payment. Calculate the total cost of owning and maintaining the vehicle throughout the agreement term — that is what will show you which option offers better value.