Decision Guide
Should I Lease or Buy?
The lease vs. buy decision is one of the most important choices you'll make. This guide will help you decide which option fits your life and finances.
Quick Decision Framework
🔑 Lease If You...
- ✓ Drive less than 12,000-15,000 miles/year
- ✓ Want a new car every 2-3 years
- ✓ Prefer lower monthly payments
- ✓ Want full warranty coverage
- ✓ Don't want to deal with selling
- ✓ Use the car for business (tax benefits)
🚗 Buy If You...
- ✓ Drive more than 15,000 miles/year
- ✓ Keep cars for 5+ years
- ✓ Want to build equity
- ✓ Want to customize/modify
- ✓ Have kids who might damage interior
- ✓ Value long-term cost savings
Leasing vs. Buying: Complete Comparison
| Factor | Leasing | Buying |
|---|---|---|
| Monthly Payment | Lower (typically 30-40% less) | Higher |
| Down Payment | Often $0-2,000 | Typically 10-20% |
| Ownership/Equity | None at end | Build equity over time |
| Mileage | Limited (10-15K/year) | Unlimited |
| Wear & Tear | Fees for excess | No penalties |
| Customization | Not allowed | Full freedom |
| Long-term Cost (6+ years) | Higher (continuous payments) | Lower (paid off eventually) |
| End of Term | Return, buy, or new lease | Keep, sell, or trade |
The Financial Reality
Let's look at the real numbers comparing leasing vs. buying a $40,000 car over 6 years:
Leasing (Two 36-month leases)
Buying (60-month loan)
The takeaway: Buying costs about $4,000 less over 6 years in this example, plus you own a car worth $18,000. However, leasing provides lower monthly payments and always having a new car under warranty.
When Leasing Makes Sense
- 💼Business use: Lease payments may be tax deductible as a business expense
- 🔧Hate maintenance: Always under warranty, never worry about repairs
- ✨Love new cars: Get the latest features and tech every few years
- 💵Cash flow priority: Lower payments free up money for other investments
When Buying Makes Sense
- 🛣️High mileage: If you drive 15,000+ miles/year, mileage fees make leasing expensive
- 👶Kids/pets: No worry about wear-and-tear charges at lease end
- 🔩Customization: Aftermarket parts, tinting, modifications allowed
- 📈Long-term savings: Once paid off, you have years of no payments
Frequently Asked Questions
Is leasing a waste of money?▼
Not necessarily. While you don't build equity, leasing offers predictable costs, warranty coverage, and lower payments. If you invest the monthly savings, the total cost difference narrows. It's not "throwing money away"—you're paying for the use of a new car.
Can I negotiate a lease like a purchase?▼
Yes! The capitalized cost (selling price) is fully negotiable, and each dollar off reduces your payment. You can also sometimes negotiate the money factor. Always negotiate the price before discussing lease terms.
What happens at the end of a lease?▼
You have three options: return the car and walk away, buy it at the residual value, or start a new lease. If the car is worth more than the residual, buying can be a good deal—you get instant equity.
Compare the Numbers
Use our Lease vs Buy Calculator to see exact costs for your specific situation.