Leasing vs. Buying a Car: Which Should I Choose?

It's More Than Just Your Monthly Payment

Illustration showing the pros and cons of buying vs. leasing a car

The Balance / Melissa Ling

A new or used vehicle is one of the most significant expenses individuals and families incur, other than housing costs. Vehicles, whether leased or financed, are considered a typical cost of American life by many people. If you don't want to deal with an auto loan or you find it too daunting to save up for the full price of a car, you may want to consider leasing a vehicle. It is not for everyone, though.

Leases often are cheaper in the short term, but in the long run, purchasing a vehicle is generally less expensive. Weighing the pros and cons of leasing vs. buying a car will help you come to the decision that is right for you and your family.

What's the Difference Between Leasing and Buying a Car?

A car lease is a contract in which one party permits another party to drive a vehicle for a specified period of time in exchange for periodic payments, usually monthly installments. Unless your contract has the option to purchase the car at the end of the contract period, you must turn it back over to the lessor.

The difference between leasing a car and financing a car is that with financing, you are purchasing the vehicle. You will still make monthly payments, but at the end of the term, you'll own the car.

 Leasing Buying 
 Lower monthly payments Higher monthly payments
 Return the car at the end of the lease Keep the car
Better warranty protection Post-warranty repair costs


A typical car lease payment can be significantly lower than your monthly payments would be if you were purchasing the same vehicle and financing it with a traditional personal auto loan. That's because lease payments are based on the depreciation in value of the vehicle over the course of the lease period instead of the vehicle's full value.


Drivers can lease a vehicle that is nicer and more expensive than one they could afford to purchase. Leases generally run for two to four years, and when they expire, you are eligible to sign a lease on a new car. When your lease is up, you don't have to go through the time-consuming resale process. You can jump right into a new leased vehicle and leave the sales hassle to someone else.

When you buy a car, you don't have to give it back when the loan is up. But if you want to get rid of it, you'll need to find someone to buy it from you.


Your new leased vehicle will likely remain under warranty throughout the lease period and, therefore, will rarely require anything more than routine maintenance. With a lease, you never have to worry about any mechanical failures. No matter what, you’ll be covered.

When you buy a car, it may be covered under a warranty for a short time. However, unless you extend the warranty, you'll need to pay for all repairs out-of-pocket when it expires.

Which Is Right for Me?

Making monthly payments throughout the life of your lease requires a stable and predictable source of income. When you have a lease, it is harder to get out of the contract than it might be to sell a used vehicle.

Car leases typically have a stated (but negotiable) maximum number of miles that the lessee can drive per year, known as the mileage allowance. The standard mileage allowance for a private driver lease normally ranges from 10,000 to 15,000 miles per year. If a driver exceeds the mileage allowance, they'll be charged an additional fee per mile. If you do decide to take on the responsibility of a lease, make sure you read the fine print.

Although a lease has a lot of great perks, you’ll often pay more in the long run for a comparable vehicle if you lease it rather than buying it. Leases often come with many fees and penalties. Upfront fees may include down payment, security, and license fees. Penalties may include default charges for late payments, fees for ending the lease before the agreed-to period, and wear-and-tear charges.


Simple things like procrastinating on regular maintenance can cost you a lot of extra money.

While selling a vehicle is seldom a money-making endeavor, you’ll at least get something in return for your vehicle rather than walking away with nothing once your lease is up.

When Buying Is Better

Buying may be the better decision if your goal is to minimize costs. When you buy a car, each loan payment goes toward owning your car outright. Most car loan terms are 4-6 years. After paying off your loan, you can drive the car without payments. You can also choose between trading it in for a new model or selling the vehicle. If you take good care of the vehicle, the resale value can help you recoup some of your expenses.

Buying is also the better choice if you like to customize your car. The ability to do whatever you want, whenever you want, with your vehicle without the fear of additional fees is a great feeling. Even if you have a loan, the car is yours to do with as you wish. When you own your car, you can drive as much as you want and customize it to your heart's content.

If you drive a lot of miles, buying could be the right choice. You can drive as many miles as you want without worrying about penalties. There also are no wear-and-tear fees when your loan runs out, as there often are with leases.

As long as you are committed to driving your vehicle for an extended amount of time and have adequate car insurance coverage, you are unlikely to lose out financially.

When Leasing Is Better

Leasing could be the better choice if you're trying to keep your monthly payments low. With a loan, you're paying for the full value of the car over a few years, which means your monthly payments usually are higher than with a lease.

People who hate worrying about car repairs often prefer leases. It can be incredibly frustrating when your newly purchased car has a major mechanical problem shortly after the warranty runs out. When you own a car past its warranty expiration, the costs of all repairs fall on you. Likewise, excessive mileage and wear and tear will harm your car's resale value, and you’ll be responsible for trading or selling your used car if you want a different one.

However, when you lease a car, you never have to worry about repairs. Your car is covered under warranty during the lease period, so you'll simply bring it in to the lessor's repair shop to be fixed.

The Bottom Line

Choosing whether to buy or lease a car is a serious financial decision. Research terms, compare payments, and calculate how much you'll pay in each scenario over the long term. Remember: Negotiation is always necessary, whether you opt to buy or lease a vehicle.

Frequently Asked Questions (FAQs)

Do I still need to pay for maintenance when leasing a car?

Leases will generally require you to maintain the upkeep of the vehicle. This can include but is not limited to things like oil changes, repairs, and parts replacements. Some leases will cover the cost of regular maintenance work like oil changes. This is something you can discuss when working through the lease agreements. If they do cover it, make sure to get the details on where it must be done, when, and how they will ensure payment.

Is it more expensive to buy or lease a car?

While monthly payments on the lease of a car can be less expensive than the ones when buying a car, it is usually more costly to lease in the long run. You will never own the asset and will make the monthly payments continuously instead of paying off the loan to buy the car.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. U.S. Bureau of Labor Statistics. "Prices & Spending," Chart 1.

  2. Board of Governors of the Federal Reserve System. "Keys to Vehicle Leasing: End of Term."

  3. Consumer Financial Protection Bureau. "What Should I Know About the Differences Between Leasing and Buying a Vehicle?"

  4. Board of Governors of the Federal Reserve System. "Keys to Vehicle Leasing: Mileage."

  5. Comprehensive Consumer Guide. "Vehicle Leasing: Leasing vs. Buying: Maintenance Requirements."

  6. Consumer Reports. "Leasing vs. Buying a New Car."

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