Question 1

Is it cheaper to lease or buy a car?

Accepted Answer

Buying is almost always cheaper long-term since you build equity and eventually own the vehicle outright. Leasing makes sense if you want lower monthly payments, like driving a new car every 3 years, and drive under 12,000 miles annually.

Question 2

What is a money factor in a car lease?

Accepted Answer

The money factor is the lease equivalent of an interest rate. Multiply it by 2,400 to convert to an approximate APR. A money factor of 0.00125 equals roughly 3% APR. Always ask the dealer for the money factor to compare true lease costs.

Question 3

What happens at the end of a car lease?

Accepted Answer

You return the car, buy it at the residual value stated in your lease, or lease/buy a new vehicle. You may owe fees for excess mileage (typically $0.15–0.30/mile over the limit) or excess wear and tear.

Question 4

What is a residual value in a car lease?

Accepted Answer

The residual value is what the car is projected to be worth at the end of the lease term, expressed as a percentage of MSRP. Higher residual = lower lease payment because you're only financing the depreciation gap.

Question 5

Should I put money down on a car lease?

Accepted Answer

Generally no — a down payment on a lease lowers your monthly payment but you lose that money if the car is totaled. Instead, negotiate a lower selling price or find a lease with a lower money factor.

Lease or buy —
which actually costs less?

Frequently Asked Questions

Lease or buy —which actually costs less?

Frequently Asked Questions

Lease or buy —
which actually costs less?