Lease vs Buy a Car: When Leasing Actually Wins

What a lease really is

A lease pays for the car's depreciation during the term plus a rent charge and fees. You never build equity; at term end you return the car or buy it at the residual value. Buy a car with a loan and every payment shifts equity from the bank to you.

The monthly-payment trap

Lease advertisements quote low monthly payments because you are only financing depreciation — but at lease end, you own nothing and start another payment. Comparing payment sizes alone always flatters the lease.

When leasing is rational

Short ownership horizons, business use (lease payments can be deductible), manufacturer-subsidized leases with high residuals, and drivers who want warranty-covered cars with predictable costs and no resale hassle.

When buying wins

High annual mileage, long holding periods (the paid-off years are pure upside), and anyone who modifies their vehicle. Buying used and holding is typically the cheapest path per mile over a decade.

Run your own numbers

The lease-vs-buy calculator models total cost of ownership over your actual holding period: down payment, monthly costs, residual value, mileage fees, and maintenance. The answer flips based on how long you keep cars — which is why the holding-period input matters more than the sticker numbers.

Sources and further reading

• Wikipedia — Vehicle leasing
• Consumer Reports — Leasing vs Buying