Leasing vs Buying a Car: The 5-Year Cost Comparison
Leasing has lower monthly payments. Buying costs less long-term. Here is the actual math over 5 years.
A $35,000 car purchased with $5,000 down, 60-month loan at 6.5%: $588/month for 5 years, then $0/month while you still own the car. Total 5-year cost including depreciation: approximately $17,000 (payments minus resale value). The same car leased at $350/month with $2,000 down for 36 months, then a new lease: approximately $23,000 total for 5 years with nothing to show for it.
Why Leasing Feels Cheaper
The $350 lease payment versus $588 loan payment is the comparison most people make. But the loan ends after 60 months. The lease never ends — you always have a payment. Over 10 years: buying costs $20,000-25,000 net. Leasing the same quality car: $45,000-50,000 net. The longer you keep a car after it is paid off, the more buying saves.
When Leasing Actually Wins
You use the car for business (lease payments may be fully tax-deductible). You genuinely want a new car every 2-3 years and value that above cost savings. You drive under 10,000-12,000 miles per year (lease mileage limits). You do not want to deal with maintenance on an aging vehicle.