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Compare total costs of leasing vs. buying a vehicle with equity and break-even analysis.
Leasing a vehicle means paying for the depreciation during the lease term with no equity. Buying means paying for the full vehicle and building equity. The better option depends on how long you keep the vehicle, annual mileage, and whether equity matters to you.
Better Option
saves $2,124.07 over the comparison period
| Scenario | Better Option |
|---|---|
| Keep car < 3 years | Lease often better Lower monthly cost, always under warranty |
| Drive < 12,000 miles/yr | Lease often better Avoid mileage penalty risk |
| Keep car 5+ years | Buy usually better Build equity, no recurring payments |
| High mileage driver | Buy usually better No mileage overage charges |
| Business use | Lease may be better Lease payments may be tax-deductible |
Formula
Total Lease Cost = (Monthly Payment × Months) + Down Payment + Fees | Net Buy Cost = Total Paid − Residual ValueMonthly Payment = Regular lease payment each month for the lease term
Total Paid = All loan payments plus down payment for the buy scenario
Residual Value = Estimated vehicle value at end of ownership period (equity built)
Worked Example
$35,000 car: 5-year buy vs. 3-year lease
Did you know? The average car lease payment in the US was $548/month in 2024, compared to $738/month for financed vehicle purchases. However, lease payments build zero equity — making buying more cost-effective for consumers who keep vehicles beyond 3–4 years (source: Experian State of the Automotive Finance Market, Q4 2024).
Sources
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