The cost of a new or even a used car is soaring into the stratosphere. Last year’s expectations were that the auto market would cool down and prices would ease a bit. Those expectations were wrong. In 2025, the average cost of a new car was more than $50,000. So, buying a car is major financial decision and one that often revolves around whether to buy or lease.
The New York Times says “either can make sense, depending on your personal situation.
If you’re looking for the lowest overall cost over the longer term, buying a car with a loan, and then driving it for a while debt free after you finish making payments, is usually the best option.
But if low monthly payments and a smaller down payment are a priority, a lease may be worth considering.”
“Your financial situation and priorities will help you decide which is the right choice,” Investopedia.com advises. “For example, if you have a long commute or love road trips, financing and/or owning a car might be a better option. But if you’d like to drive a brand-new car every few years and you don’t drive a ton of miles, leasing could be a great fit.
Before you start checking out online ads and visiting dealerships, here’s how to decide if you should lease or buy your next ride.
And there are other factors. Here are some of the key considerations laid out in a chart from Bankrate.com to help you decide:
|
|
Buy |
Lease |
|
Ownership |
You build equity with each payment and own your vehicle once your loan is repaid. You are free to sell your vehicle at any time. |
You do not build equity and will not own the vehicle. |
|
Upfront costs |
You should expect to put down 10% to 20% of the vehicle’s purchase price. |
You may need to pay a security deposit in addition to other fees. |
|
Monthly payments |
Your monthly payments will be higher, but you will only make them until the loan is repaid. |
Your monthly payments will cover the vehicle’s depreciation, and you will pay them until the lease ends. |
|
Maintenance and warranties |
Warranties usually last for three years or 36,000 miles on new cars, although it varies. You are responsible for other maintenance costs. |
Your warranty should cover the entire term of your lease and cover most or all repairs, but you are still responsible for general maintenance. |
|
Limitations |
There are no limitations on how much you drive or what you do with a vehicle you own. |
You will face mileage restrictions and penalties for any damage or wear-and-tear that goes beyond expected use. |
|
Depreciation |
Depreciation will affect the value of your vehicle if you ever sell or trade it, which could leave you upside-down on your loan. |
Depreciation is estimated and divided over your monthly payments, but only over the term of your lease. |
If you are leaning in the direction of leasing AARP Magazine cautions that “before signing the lease, be aware of the many incidental fees (such as for acquisition, documentation and title). For example, you'll pay penalties for driving more than 12,000 or 15,000 miles a year unless you buy additional mileage in advance. If you want to give up the car before the end of the lease, you'll owe early termination fees that might run to several thousand dollars…
A crash that totals the car is considered early termination; to protect yourself, always buy gap insurance to cover that unexpected cost. At the end of the lease, there might also be a fee for unusual wear and tear.”
To keep more money in your pocket—negotiate—and that’s not only when you are buying. Consumer Reports points out that “many people assume that the monthly payment printed in a leasing ad is etched in stone. But that figure may be based on the manufacturer’s suggested retail price, which can be negotiated downward just as if you were buying the vehicle. Be aware, though, that the best lease deals are available only to those with superb credit, and that they may only be cheap because the automaker is trying to clear the decks of slow-selling cars.”
Investopedia.com says the bottom line is “leasing a car is like a long-term rental and may be a cheaper way to drive a new vehicle. Buying a car gives you ownership and control, but it may cost more upfront and, if you finance a vehicle, your monthly loan payments may be higher than leasing. Buying and leasing are both great options—neither one is better in every case. The best choice for you depends on your lifestyle and financial situation.”
