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Comparison · Finance

Lease vs Buy (Finance)

Leasing is renting — you pay for depreciation only, not the car. Buying is ownership — you pay full price but keep the car (or its trade-in value) at the end. Over a 10-year horizon, buying almost always wins financially. Over 3 years, leasing can win if you only need the car short-term.

Factor Lease Buy (Finance)
Monthly payment Lower (~30–40% less) Higher
Down payment $0–$3,000 typical Usually 10–20% recommended
What you own at end Nothing The car (worth 30–50% of original)
Mileage limits 10K–15K/yr; $0.15–$0.25 per excess mile No limit
Wear-and-tear penalties Yes — pay at lease-end You absorb it (your car)
Customization No (must return stock) Yes
10-year total cost (typical) ~$60–80K (3 leases back-to-back) ~$35–50K (one car, 5-yr loan + 5 yrs paid-off)

Choose Lease when…

You want a new car every 2–3 years, you drive under 12K miles/yr, the lease has manufacturer subsidies, you write off the payment as a business expense, or you specifically want a luxury car you cannot afford to buy.

Choose Buy (Finance) when…

You plan to keep the car 5+ years, you drive more than 15K miles/yr, you want zero monthly payment after year 5, or you live somewhere a paid-off car is the only sane financial choice (most of the US).

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Frequently asked questions

Why do leases look so cheap?

You only pay for the depreciation during the lease term, not the full car value. A $40,000 car that's worth $25,000 after 3 years has $15,000 of depreciation, which is what you finance — far less than $40,000 of purchase.

Are leases a tax write-off for self-employed?

Partial. If you use the car 60% for business, you can deduct 60% of the lease payment (with a "lease inclusion amount" reduction on luxury cars). For purchased cars, Section 179 + bonus depreciation can be more powerful in year one.

Should I lease an EV?

Often yes for the EV-specific reason that battery technology and federal incentives change yearly. A 3-year lease lets you upgrade as the tech improves without being stuck with a depreciating older battery.

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