Lease vs. Buy a Car: The Complete Financial Comparison (2026)
Monthly payments, 5-year total costs, equity, mileage limits, and a decision matrix — everything you need to make the right call.
Leasing and buying are fundamentally different financial products. Leasing is renting with a buyout option; buying is ownership with monthly financing. Neither is universally better — the right answer depends on how you use the vehicle, how long you keep cars, and what you value. Here is the complete comparison.
The Monthly Payment Difference
Using a 2026 Honda CR-V at $35,000 MSRP as the example — a popular vehicle with competitive lease residuals:
| Lease (36 months) | Buy — 60 months | Buy — 72 months | |
|---|---|---|---|
| Down payment | $2,000 | $3,500 (10%) | $3,500 (10%) |
| Monthly payment | ~$380/mo | ~$625/mo | ~$538/mo |
| Miles included | 10,000–12,000/yr | Unlimited | Unlimited |
| Ownership at end | None — return car | Own outright | Own outright |
| Total out-of-pocket (term) | ~$15,680 | ~$37,500 | ~$38,236 |
Lease: $2,000 cap reduction, 0.00125 money factor (≈3.0% APR), 54% residual. Buy: 7.0% APR. Estimates only.
The monthly payment gap is real — often $200–300 per month. But the lease payment buys you nothing at the end of 36 months. The purchase payment builds toward ownership of an asset worth $15,000–20,000 at the end of 60 months.
5-Year Total Cost Comparison
Looking at a full 5-year window is the only meaningful way to compare lease vs. buy — because a 36-month lease is followed by another vehicle decision:
| 5-Year Scenario | Total Spent | Asset Value at Year 5 | Net Cost |
|---|---|---|---|
| Lease 36mo + Lease 24mo (new vehicle) | ~$24,400 | $0 (return both) | ~$24,400 |
| Buy 60mo at 7%, own outright yr 5 | ~$37,500 | ~$16,000 (resale) | ~$21,500 |
| Buy 72mo at 7%, still in payments yr 5 | ~$34,100 (5yr pmts) | ~$16,000 + $9k equity | ~$18,100 |
Honda CR-V at $35,000. Lease figures include cap reduction. Insurance, tax, maintenance excluded. Use the calculator for your specific scenario.
Over 5 years, buying typically produces a lower net cost once vehicle equity is counted — but only if you hold the vehicle long enough to benefit. Buyers who trade in every 3–4 years before paying off often end up in a worse position than leasers because they never reach the ownership phase.
Ownership and Equity
A purchased vehicle is an asset, however depreciating. It can be sold, traded, paid off early, or refinanced. At the end of a loan, you own a vehicle free and clear — typically worth $10,000–20,000 depending on make and mileage. That equity can fund the next vehicle purchase, reducing the loan needed.
A leased vehicle produces no equity. When the lease ends, your three years of payments have purchased you nothing except the use of the vehicle. The next lease starts the payment cycle again from zero. This is the fundamental lease trade-off: low monthly payment, perpetual payment obligation.
Mileage Limits and Usage
Standard lease contracts allow 10,000–12,000 miles per year. Overage charges run $0.15–$0.30 per mile — meaning 5,000 extra miles over a 36-month lease can cost $750–$1,500 at return. High-mileage drivers (15,000+ miles/year) almost always find buying cheaper.
You can negotiate higher mileage allowances upfront, typically at $0.05–$0.10/mile added to the monthly payment — much cheaper than overage charges. If you know you'll drive 15,000 miles/year, buy the miles in the contract.
End of Lease Options
When a lease ends, you have three choices:
- Return the car: Pay any overage/damage fees, walk away, and lease or buy something new.
- Buy it out: Purchase at the residual value stated in your lease. If the car's market value exceeds the residual, this is a profitable move — you're buying below market. If market value is below residual, walk away.
- Lease a new vehicle: The cycle continues. Most lease drivers do this.
The buyout option is worth evaluating at every lease end. Post-pandemic used car valuations made millions of lease buyouts profitable — lessees who bought their vehicles at residual and sold them privately captured $5,000–10,000 in profit in some cases. This market has normalized somewhat but buyout analysis is always worth doing. See: end-of-lease options guide.
Decision Matrix: When to Lease vs. Buy
| Factor | Lease Wins When… | Buy Wins When… |
|---|---|---|
| Annual mileage | Under 12,000 miles/year | Over 12,000 miles/year |
| How long you keep cars | 3 years or less | 5+ years |
| Monthly cash flow | Maximizing monthly savings matters | Building equity is the priority |
| Usage | Light, normal use (no modifications) | Work truck, towing, off-road use |
| Depreciation concern | New car, high first-year drop | Used car, depreciation already taken |
| Tax situation | Self-employed (deduct lease payments) | Standard buyer, no special deduction |
| Credit score | 720+ (required for best residuals) | Any score that gets approved |
For more detail on specific scenarios: how a car lease actually works, how to negotiate a lease, and leasing with bad credit.