What does a vehicle cost over the time you keep it?

The monthly payment covers the use of the vehicle over the contract, and nothing else. Everything that happens while the vehicle is on your drive sits outside it: the fuel or electricity, the insurance, the servicing, the tyres, the tax treatment, and whatever you are charged when the vehicle goes back.

Two quotes that look £30 a month apart can end up thousands apart over four years once those items are counted, and they can move in either direction. A vehicle with a higher payment and lower running costs frequently beats a cheaper-looking one, which is why I am wary of any recommendation made from a payment figure alone.

The honest version of this is not complicated, it just takes gathering. What I do when a client asks me to compare two solutions is put both through the same list, so that we are comparing the same things rather than two marketing figures that happen to be presented the same way. That is a large part of what the services I offer amount to in practice.

Start with your genuine annual mileage, not the number on last year's contract, then apply a pence-per-mile figure to it. HMRC publishes advisory rates that give you a defensible starting point: from 1 June 2026, the advisory electricity rate is 7p per mile for home charging and 15p per mile for public charging, while petrol runs from 14p per mile for engines of 1400cc or less up to 26p per mile above 2000cc, and diesel from 15p to 23p across the equivalent bands (GOV.UK, Advisory fuel rates).

Those rates exist for reimbursing employees rather than for costing a fleet, so treat them as a sanity check rather than a budget. What they do show plainly is the size of the gap. On 20,000 miles a year, the difference between 7p and 26p is several thousand pounds over a four-year contract, which is more than most of the monthly-payment differences I am asked to explain.

The electric question turns almost entirely on where the vehicle sleeps. A van that charges at a depot or at the driver's house overnight is a different proposition from one that lives on the road and uses public rapid chargers, and the advisory rates put a number on exactly that difference.

Insurance, tyres, servicing and testing are the four that go missing most often, and all four are gettable before you commit. Insurance is the one worth pricing properly rather than assuming, because a van that looks sensible on paper can carry a premium that undoes the saving on the payment, and quotes for a specific vehicle, specific drivers and a specific postcode are free to obtain.

Tyres deserve more attention than they get on vans. A heavier vehicle, a load carried all day and a driver covering motorway miles will get through tyres faster than the brochure implies, and commercial sizes are not cheap.

Testing is the easy one to pin down. The maximum MOT fee is £54.85 for a car and £58.60 for a goods vehicle over 3,000kg up to 3,500kg (GOV.UK, MOT test fees). Servicing depends on the schedule and whether maintenance is bundled into the agreement, and if it is bundled, I want to know exactly what it covers before treating it as a saving.

More than most owners have ever put a number to, and for a business running one or two vehicles it is often the largest hidden cost of the lot. Research by Opinium for Mercedes-Benz Vans, surveying 500 senior decision-makers at UK businesses that rely on vans, put the average cost of a van being off the road at £1,172.20 a day, with businesses reporting an average of six and a half days of vehicle-related disruption over the previous year (Business Motoring).

That is an average across industries and it will not be your number, but it reframes the comparison usefully. If one vehicle has a reputation for a recurring fault, or the local dealer network for it is thin, or the courtesy vehicle arrangement in the agreement is vague, those are cost items even though nobody writes them on a quote.

It is also why I ask where the vehicle will be serviced and how quickly parts turn up before I get enthusiastic about a saving of £20 a month. A single week off the road can wipe out four years of that.

A contract mileage is a commitment, and going over it is charged at a pence-per-mile rate written into the agreement. That rate varies by funder and by vehicle, so it belongs in the comparison from the start rather than being discovered later. Setting the allowance honestly at the outset almost always costs less than under-declaring and paying the excess.

At the end of the term the vehicle is inspected. The BVRLA is clear that customers are not charged for refurbishment arising from normal wear and tear, and that fair wear and tear "occurs when normal usage causes deterioration to a vehicle" and "is not to be confused with damage, which occurs as a result of a specific event or series of events." The inspection covers damage, excessive wear, missing equipment, service history and mileage (BVRLA, Returning your leased vehicle).

For a working van that carries tools and materials, this is worth a conversation at the start. Ply-lining, roof racks and how the load area is treated all bear on what comes back at you in year four, and the BVRLA guide tells you the standard you are being measured against before you sign anything.

If you own the vehicle, depreciation is a genuine cost even though no money leaves the account for it each month. What you eventually get for the vehicle, minus what you paid, spread over the years you kept it, is the cost of that ownership, and for many vehicles it is the single biggest line in the whole picture.

The reason it slips past people is that it arrives all at once at the end, as a disappointing part-exchange figure, rather than as a monthly debit. When you lease, the funder has already estimated that residual value and built it into your payment, which is why a vehicle that holds its value well can carry a lower monthly figure than its list price suggests.

So comparing a lease against a purchase means putting an honest resale estimate against the purchase, and comparing like with like. I would not put a percentage on depreciation for your specific vehicle, because the published figures vary considerably by source and by segment, and a number that is wrong for your van is worse than no number at all.

It can change it substantially, and it is one of the reasons a van and a car with identical payments are not identical costs. HMRC's position is that a business leasing a qualifying car for business purposes will normally be unable to recover 50% of the VAT charged, a block that covers private use, though the maintenance element charged separately on the invoice is not subject to that same restriction (HMRC, VIT53300). VAT on a lorry, van or other commercial vehicle sits under different rules again.

That mechanic alone can move the real cost of a car lease relative to a van lease in a way the advertised payment never shows, and it is a common reason two quotes that look comparable are not.

I will raise these questions and tell you which ones matter for your comparison. I am not going to tell you how they apply to your business, because that depends on your VAT position, how the vehicle is used and who drives it, and your accountant is the right person to confirm it before you commit. You can see what I do and do not cover on the FAQs page.

Bring the annual mileage you genuinely expect, where the vehicle will charge or refuel, who will drive it, what it will carry, and how long you want to keep it. With those five answers I can get quotes that are comparable, and without them any comparison is guesswork dressed up in decimal places.

The rest of the list follows from there: an insurance quote for the exact vehicle and drivers, the servicing schedule and whether maintenance is included, the contract mileage and the excess rate, the end-of-contract standard, and the VAT question for your accountant.

None of this requires a spreadsheet you will never open again. It requires somebody to gather the numbers once and lay them out side by side, which is work I do routinely and which is why the first conversation is free. If you are weighing up two vehicles or two funding solutions and want the whole picture rather than the advertised one, get in touch and tell me what has prompted the search.