Reviewed by Arya Keshavarzian, Co-Founder
The short answer
Lease if you want a new car every two to four years, drive a predictable number of miles and prefer a lower monthly payment. Buy if you keep cars for many years, drive a lot, or want to modify the car and own it outright.
Want both numbers for the same car side by side?Get a quote
Why a lease payment is lower
A lease payment covers the part of the car’s value you use up during the term (the price minus the residual value), plus a finance charge. A loan payment covers the whole price. On the same car, the lease payment is usually lower. Luxury cars often have strong residual values and manufacturer lease support, which can make the gap wider. See the leasing guide for how the payment is built.
Total cost over time
Over one term, leasing usually costs less cash than buying. Over many years, buying usually costs less, because once the loan is paid off you keep driving without a payment. If you would replace the car every few years anyway, you pay for the depreciation either way. A lease simply makes it a fixed monthly cost.
Mileage
A lease comes with a yearly mileage allowance, commonly 7,500 to 15,000 miles. Miles over the allowance are charged at the end, at a rate set in the contract. If you drive far more than 15,000 miles a year, buying is usually simpler. If you drive fewer miles than expected, a low-mileage lease lowers the payment.
Equity and lease end
When you buy, the car is yours and so is whatever it is worth. With a lease, you can return the car, buy it at the price set in the contract, or trade it in if it is worth more than the payoff and the lender allows it. See lease end options.
Sales tax
In many states, including California, sales tax on a lease is charged on each monthly payment, not on the full price of the car. Rules vary by state, so check yours.
Quick comparison
- Best for: lease if you want a new car every few years, buy if you keep cars for a decade.
- Monthly payment: usually lower on a lease.
- Miles: capped on a lease, unlimited when you own.
- Equity: none on a lease, builds as you pay down a loan.
- Warranty: a typical lease ends while the car is still under factory warranty.
See both numbers
Browse the current lease deals, or tell us the car you want and we will send the lease numbers so you can compare them with a purchase.