Lease vs Buy a Car: The Real Math Behind the Decision
Leasing looks cheaper monthly, but buying usually wins long-term. See the 5-year math.
Written by
Robert Kim
Home & Auto Editor - General Contractor License (CA)
Robert Kim is a licensed general contractor with 18 years of residential construction experience. He reviews Qudexa's home improvement and auto calculators using current US market data from HomeAdvisor, Angi, and RSMeans.
Last reviewed: October 15, 2026
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๐ Lease vs Buy a Car
Leasing offers lower monthly payments โ but you never own the car. Buying costs more upfront but builds equity. Which is actually cheaper? It depends on how long you keep cars.
Lease if you want a new car every 3 years, drive under 12K miles/year, and value low monthly payments. Buy if you keep cars 5+ years, drive a lot, or want to build equity.
๐ฐ Real 5-Year Comparison: $40K Car
| Cost | Lease (5yr) | Buy (5yr) |
| Down payment | $3,000 | $8,000 |
| Monthly payments | $450 ร 60 = $27,000 | $580 ร 60 = $34,800 |
| Sales tax + fees | $2,400 | $3,200 |
| Maintenance (5 yr) | $0 (warranty) | $2,500 |
| Total spent | $32,400 | $48,500 |
| Car value at end | $0 | $22,000 |
| Net cost | $32,400 | $26,500 |
Buying saves $5,900 over 5 years โ because you own the car. Lease only wins if you'd trade every 3 years anyway.
โ๏ธ When to Lease vs Buy
- Want new car every 3 years
- Drive under 12K miles/year
- Use car for business (tax deductions)
- Value lower monthly payment
- Don't want maintenance hassles
- Keep cars 5+ years
- Drive 15K+ miles/year
- Want to build equity
- Modify or customize the car
- Want to sell later
Watch for: acquisition fee ($600-900), disposition fee ($300-400), excess mileage (25-35ยข/mile), excessive wear charges, and early termination penalties. These can add $2,000+.
โ FAQ
Is leasing ever cheaper than buying?
Only if you always trade every 3 years (leasing then = new car habit) or if you use the car for business with tax write-offs. Otherwise buying wins.
What's a good lease payment?
Rule of thumb: monthly lease payment should be under 1% of MSRP. On a $40K car, target $400/month or less with $0 down.
Can I negotiate a lease?
Yes! Negotiate the cap cost (car price), money factor (interest rate), and residual value separately. Never negotiate the monthly payment alone.
Compare Both Options
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