Korean Car Lease Comparison Calculator

This calculator sets side by side how much a company can deduct in the year, and how much tax it saves, when it takes a business passenger car on a finance lease, an operating lease or a long-term rental. Enter the car's price, the monthly payment, the months used in the year, the insurance and vehicle tax included in the payment, finance-lease interest, other running costs such as fuel, whether business-only insurance is in place, the driving log and business-use ratio, whether the company is mainly a property lessor, and the tax rate, and you get a table for all three.

The three methods can have similar total costs yet different deductions, because each treats a different amount as depreciation and only that amount is subject to the annual cap. No method is always better; the ranking shifts with the relationship between the car's price and the lease payment. The calculator exists to show that ranking in real numbers.

Company directors and bookkeepers use it before signing a vehicle contract. Quotes from lessors and rental firms are easy to compare on monthly payment, but once tax is included the order can change. Get quotes for the same car under all three methods and enter each set of figures to see the real cost.

It is also useful before closing the books. Whether costs ran past ₩15 million without a driving log, whether a property-letting company faces the halved cap, and whether a car brought in mid-year needs a prorated cap are all answered here. Sole proprietors follow a parallel rule in 소득세법 and should use the business car expense calculator instead.

법인세법 제27조의2 allows only the business-use portion of passenger car costs as a deduction, and caps depreciation, or the depreciation-equivalent part of lease payments, at ₩8 million a year. For a company whose main business is property letting the cap is ₩4 million. Anything over the cap is not lost but carried into the next business year, where it is deducted to the extent that year's cap has room. If the car was used for only part of the year, the cap is reduced in proportion to the months.

What counts as depreciation differs by method. Under a finance lease the company is treated as having bought the car per 법인세법 시행령 제24조, so the car's price divided straight-line over 5 years is the depreciation, and the lease interest is a related cost but outside the cap. Under an operating lease, 시행규칙 제27조의2 takes the payment less insurance, vehicle tax and maintenance as the equivalent, and where maintenance cannot be separated it is deemed to be 7% of the payment net of insurance and tax. For a rental car, 70% of the payment is the equivalent.

The business-use ratio comes from 시행령 제50조의2. Without business-only insurance a company's allowance is zero from the very first car. With a driving log the log's ratio is used; without one, costs up to ₩15 million are allowed in full and above that only the ratio of ₩15 million to total cost. The order is: add up related costs, apply the ratio, compare the depreciation or its equivalent with the cap, carry the excess forward, and multiply what remains by the tax rate for the saving.

The default on screen is a ₩60 million car at ₩1.1 million a month for 12 months, with ₩1.2 million of insurance and ₩500,000 of vehicle tax inside the payment, ₩2 million of finance-lease interest, ₩3 million of fuel and other costs, a log showing 100% business use and a tax rate of 19%. On the finance lease, ₩60 million over 5 years gives ₩12 million of depreciation, and with interest, insurance, tax and other costs the related total is ₩18.7 million. Depreciation exceeds the ₩8 million cap by ₩4 million, which carries forward, so this year's deduction is ₩14.7 million and the saving ₩2,793,000.

On the operating lease, the ₩13.2 million annual payment less insurance and tax is ₩11.5 million, and taking 7% off again for maintenance gives an equivalent of ₩10,695,000. Related costs are the payment plus other costs, ₩16.2 million; ₩2,695,000 carries forward, leaving a deduction of ₩13,505,000 and a saving of ₩2,565,950. On the rental, 70% of the payment, ₩9.24 million, is the equivalent, so only ₩1.24 million carries forward and the deduction of ₩14.96 million, saving ₩2,842,400, is the largest of the three. The carry-forward comes back in later years, though, so over several years the gap narrows.

The most common confusion is entering the lease payment as depreciation on a finance lease. A finance lease depreciates the car's price, so lowering the payment does not change the depreciation; an operating lease or rental, by contrast, is measured on the payment itself, so a lower payment means less excess over the cap. Get that direction wrong and you reach false conclusions such as "a finance lease is always better".

Adding insurance and vehicle tax separately to related costs on an operating lease or rental is another error, since they are already inside the payment and would be counted twice; on a finance lease, which has no payment line, they must be added. Treating the carry-forward as a loss, applying a full twelve-month cap to a car brought in mid-year, and importing the sole proprietor's "from the second car" rule into a company are also frequent. For a company, the first car without business-only insurance is disallowed in full.