Is it better to lease or finance a car?

What are the advantages of leasing a car vs buying?

Lower monthly payments

When you lease a vehicle, the monthly payment is typically less than what you'd pay if you purchased the same vehicle.

Maintenance coverage

In many cases, a car you lease might still be under warranty or the leasing company might provide some maintenance coverage. This coverage may pay for standard maintenance like oil changes, which could save you money.

Newer car

Leasing allows you to drive some of the newest cars on the market. These models include the most up-to-date technology and safety features and may require less maintenance than an older car.

Lower upfront costs

Leases sometimes require a small down payment or no payment at all, which could keep money in your pocket when compared to the sizable down payments associated with purchasing a car.

No long-term commitment

At the end of your lease, you can return the car without the stress or risk of selling it.

What are the disadvantages of leasing a car vs. buying?

No equity

Lease payments cover the depreciation of the vehicle, but don't contribute to ownership. At the end of the lease term, you have no equity or car to sell.

Mileage restrictions

Leasing companies restrict how many miles you can drive a vehicle per year. The standard mileage is often around 12,000 miles annually, depending on the leasing company. You pay a fee for every mile that exceeds the limit. You may also have to pay additional penalty fees.

Potential fees

In addition to potential mileage fees, you may be responsible for wear-and-tear charges, depending on your terms and conditions. You may also face early termination fees if you need to end the lease before the term expires.

Limited vehicle modifications

While you may be able to customize a lease to your specifications, the terms and conditions of a lease typically restrict custom modifications.

Auto leasing vs. buying calculator

Use our lease vs. buy calculator to estimate the total cost of leasing or buying a car to see which makes more sense for you.

Insurance cost when leasing vs buying a car

Leasing companies may require a higher limit for auto bodily injury and property damage liability coverage limit under your car insurance policy than lenders, so you may pay more for insurance for a leased car versus a car you bought.

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