Comparison Guide

Leasing vs Buying

Leasing vs buying a car compared with real math. Monthly payment vs total cost of ownership. See which option actually saves you money long-term.

Side-by-Side Comparison

Leasing

Pros

+Lower monthly payments — you're only paying for the depreciation you use
+Always drive a newer car with latest safety tech and warranty coverage
+No hassle of selling or trading in — just return it at lease end
+Sales tax only on monthly payments (in most states), not the full price
+Can be a business write-off if used for work (Section 179 or actual expense method)

Cons

-You own nothing at the end — years of payments and zero equity
-Mileage limits (typically 10K-15K/year) — overage charges add up fast
-Wear and tear fees at turn-in can be aggressive and subjective
-You're always making a car payment — the cycle never ends

Best For

People who want a new car every 2-3 years, those who drive low miles, and business owners who can deduct the payments.

Buying

Pros

+You build equity — once it's paid off, you own an asset
+No mileage restrictions — drive as much as you want
+Years of payment-free ownership after the loan is paid off — this is where the savings happen
+Freedom to modify, customize, or sell whenever you want
+Total cost of ownership is lower over 7-10 years compared to serial leasing

Cons

-Higher monthly payments if financing — you're paying the full price
-Depreciation — a new car loses 20%+ of its value in year one
-Maintenance costs increase as the car ages (especially after warranty ends)
-Hassle of selling or trading in when you're ready for something new

Best For

People who keep cars 5+ years, high-mileage drivers, and anyone who wants to minimize lifetime transportation costs.

Feature	Leasing	Buying
Top Advantage	Lower monthly payments — you're only paying for the depreciation you use	You build equity — once it's paid off, you own an asset
Biggest Drawback	You own nothing at the end — years of payments and zero equity	Higher monthly payments if financing — you're paying the full price
Best For	People who want a new car every 2-3 years, those who drive low miles, and business owners who can deduct the payments.	People who keep cars 5+ years, high-mileage drivers, and anyone who wants to minimize lifetime transportation costs.

Glen's Verdict

Former hedge fund manager, current index fund enthusiast

Buy, and buy used. This is one of the clearest financial decisions there is. Leasing is essentially renting the most expensive years of a car's life — peak depreciation — and then giving it back before you get the cheap years. Buy a 2-3 year old car, drive it for 7-10 years, and your cost per year plummets. The average American spends $12K+/year on car payments. Imagine investing that difference after your car is paid off. That said, I get the appeal of leasing for business owners — the tax deduction and always having a reliable vehicle has real value. Just know the math isn't in your favor.

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Frequently Asked Questions

Which is better, Leasing or Buying?

It depends on your situation. Leasing is best for: People who want a new car every 2-3 years, those who drive low miles, and business owners who can deduct the payments. Buying is best for: People who keep cars 5+ years, high-mileage drivers, and anyone who wants to minimize lifetime transportation costs.

What are the main differences between Leasing and Buying?

The key differences come down to their strengths. Leasing advantages include lower monthly payments — you're only paying for the depreciation you use and always drive a newer car with latest safety tech and warranty coverage. Buying advantages include you build equity — once it's paid off, you own an asset and no mileage restrictions — drive as much as you want.

Can I have both Leasing and Buying?

In many cases, yes. Having both can provide diversification and flexibility. Evaluate your specific needs, goals, and eligibility requirements to determine if using both makes sense for your situation.

What are the downsides of Leasing?

You own nothing at the end — years of payments and zero equity Mileage limits (typically 10K-15K/year) — overage charges add up fast Wear and tear fees at turn-in can be aggressive and subjective You're always making a car payment — the cycle never ends

What are the downsides of Buying?

Higher monthly payments if financing — you're paying the full price Depreciation — a new car loses 20%+ of its value in year one Maintenance costs increase as the car ages (especially after warranty ends) Hassle of selling or trading in when you're ready for something new

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