Car leasing vs owning | Which is better?

woman leasing a car and thinking of owning it later.

Are you in a dilemma when it comes to car leasing vs owning? I often envied my friends and neighbors leasing brand-new cars every few months. But I researched the pros and cons of car leasing vs buying. Read more to get the real facts about what type of buying suits you and your lifestyle.

Car leasing vs owning

Whatever car or any other vehicle you would like to buy, deciding whether to buy a new car or lease comes down to one’s needs and lifestyle. Are you a driver who changes a car a lot? Do you hate taxes and car maintenance? Let’s look into the what are pros and cons of owning and leasing. We will also look at what are the questions you should ask yourself before going ahead and buying your next vehicle.

What is car leasing?

Leasing a car means you basically pay a monthly payment for driving a car. This monthly payment for leasing a car is lower than what you would pay if you own a car auto loan. Leasing does not involve any auto loan. You basically pay a low monthly payment which is less affordable compared to paying a loan of full car value.

The main difference is that when your lease ends, you have to give the car back to the dealer and you are no longer the owner of the car.

Should You Own or Lease a New Car?

When I was thinking of owning my first car, I wanted to own a nice sedan. I don’t even know that there is a leasing option. I could have used the leasing option and paid a lesser monthly payment but then I don’t want to give my car back when the lease expires. At the same time, the monthly payment was attractive.

You see the dilemma here and sure owning a car feels good but what if you don’t want to pay a higher payment for a car loan and pay interest especially when your credit score is low?

Let’s look at the pros and cons of leasing and buying options for your next car.

Car leasing vs owning – which finance option will be suitable for you?

If you want to own a car for a long time say 15 years and you tend to have a personal connection with your car or something like that, you should be ready to answer the two questions. Are you willing to pay the full loan that you will take for the new car? What are your driving needs? Are you a regular commuter or need a car just for running errands?

According to a survey says that only 6% of households leased a car.

Own a car? Read my post on how you can save money on gas.

Here’s a quick look at leasing vs owning a car:


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Leasing vs. Owning: What’s the Difference?

Pros and cons of leasing a car:


  • No or low down payment
  • Usually covered by warranty
  • Lower monthly payments
  • No upfront sales tax fees
  • No depreciation concerns


  • Excess mileage penalties
  • Fees for excessive wear and tear
  • Early lease termination fees
  • Generally higher insurance premiums
  • Monthly payments

Pros and cons of owning a car:


  • Eventual ownership of a car
  • No mileage limits
  • Ability to sell car anytime
  • Freedom to customize/modify
  • Generally lower insurance costs


  • Unpredictable resale value
  • Higher monthly car loan payments
  • Post-warranty maintenance expenses
  • Depreciates over time (20% once you buy a car!)
  • Large down payment

You can decide if you need to lease or own by using this handy calculator.

Ask Yourself These Questions before you decide to own or buy a car:

1. How much do you drive?

On average anyone who leases a car can drive a maximum of 15,000 miles per year and maintain the car in good shape. If you drive only let’s say 8,000 or drive more like 25,000 miles, you should negotiate up front with the dealer about the extra cost for additional miles. You will typically be charged anywhere from 15 to 25 cents per extra mile that you have driven that year.

2. Do you need your cash?

With the leasing option, your initial deposit and the monthly payment thereafter are usually less compared to when you buy a car with a car loan.

3. Do you worry about your car’s resale value?

4. Do you use your car for business purposes?

5. How stable is your life?

6. Do you trust the company you would be leasing from?

7. How often do you want a new car?

Bottom line

Buy a car if you plan to keep it for a long time, customize it to your style or if you drive a lot of miles such as commuting, frequent road trips, etc…

Nevertheless, owning is cheaper than leasing in the long run. Before you go, take a look at this nice video that puts everything in one video easy to understand.