Leasing almost always wins on monthly payment. Buying almost always wins on total cost over time. Which is "cheaper" depends entirely on your time horizon and how long you actually keep cars.
The monthly payment comparison
Take a $35,000 car. Financing it with a 5-year loan at 6.5% interest and $3,000 down results in a monthly payment of about $627. Leasing the same car for 3 years, assuming a 55% residual value and a 5% money factor equivalent, runs closer to $430/month — nearly $200/month less.
But leasing never stops
That's where the math flips. Over 6 years:
- Buying: 5 years of $627 payments ($37,620 total), then 1 year with no payment at all — you own the car. Total cost: $37,620 plus you still have a car worth roughly $14,000 in resale value.
- Leasing: two consecutive 3-year leases at roughly $430/month = $30,960 total — but at the end, you own nothing and have no resale value.
Factoring in the resale value the buyer keeps, buying comes out tens of thousands of dollars ahead over a 6-year window, even though the monthly payment was higher.
Costs people forget to compare
- Mileage limits — leases typically cap you at 10,000-12,000 miles/year; going over costs $0.15-$0.30 per extra mile
- Wear-and-tear fees — dings, stains, or worn tires can trigger charges when you return a leased car
- Maintenance after the warranty — buyers who keep a car past the loan term take on more out-of-pocket repair costs, but this is usually still cheaper than a new lease payment
The simple rule of thumb
If you plan to keep a car for 6+ years, buying is almost always cheaper. If you want a new car every 2-3 years and drive under 12,000 miles annually, leasing's lower payment and lack of resale hassle can make sense even at a higher total cost.
Run your own numbers
The breakeven point depends on the specific vehicle, loan rate, lease terms, and how long you keep the car. Use the Car Lease Calculator to compare your exact lease and loan offers side by side.