Leasing vs. buying a car: Pros, cons and what you need to know

• Car leasing might mean a lower monthly payment but also mileage limits.
• Buying a car is a good bet if you intend to keep your vehicle for a long time.

Which car to buy is just one of the decisions you'll make when it's time for a new set of wheels.

There’s also the question of whether to lease or buy.

The answer isn’t always obvious.

Who’s an ideal person to consider leasing a vehicle?

“If you’re the type of person that typically drives less than 15,000 miles a year and you’re the type of person that’s kind of addicted to the new car smell and you … don’t see your income or financial situation changing year over year, then I think leasing’s a great option,” says Joseph Yoon, Edmunds' consumer insights analyst.

Leasing rather than buying means you’re likely to be looking at a new vehicle after only a few years. Leases are often 36 months, and so a person whose lease is ending will likely be in the market for a new vehicle much sooner than someone who chooses to purchase one. Yoon said he’s on his fifth lease in 11 years. It’s an option that’s allowed him to adjust as his transportation needs have changed from a single man with a two-door vehicle to a married man with children who needed something progressively larger.

What’s significant about the mileage?

Leases have mileage limits, often 12,000 or 15,000 miles per year. When you exceed that number, you’ll be responsible for paying a penalty, which can be 25 to 50 cents per mile, according to Yoon. That means you’re paying a premium for those miles. “Sometimes it can be thousands of dollars you have to pay at the end of the lease,” Yoon said. If you need more, however, don’t fret. There are usually options to purchase more miles in advance at the beginning of the lease, and Yoon said you may even be able to purchase additional miles during the course of the lease through the lease financing entity.

Where is leasing more likely to make sense?

Larger metropolitan areas tend to be more suitable for leasing, places where your regular destinations tend to be closer and more convenient and job opportunities might be better, Yoon said.

When might buying a car be the better choice?

“If you live in a semirural area, where the nearest grocery store is 50 miles away, then it’s not really practical for you to be leasing,” Yoon said. Buying a car is also the better choice if you want to be rid of a car payment as soon as you can. The issue is that car loan terms have gotten longer as cars have gotten more expensive. Edmunds reported recently that “84-month loans hit an all-time high in Q1 2025, making up 19.8% of new-vehicle financing.”

The average new car transaction price in April, according to Kelley Blue Book was $48,699.

What are some more benefits and downsides of each?

For leasing, you’re going to have a lower monthly payment and of course that ability to get a new vehicle more frequently, but there’s something else to consider. “At the end of the term you don’t get to keep the car so there’s a feeling of ‘Did I just throw money away?’” Yoon said. If you can get past that, then leasing might be a good bet.

If you’re buying, you can do whatever you want with the car, including modifying it, something you can’t do with a lease.

“If you drive a lot, and like to tinker, the financial implications at the end of five, six, seven years (are) it’s yours and it’s fully paid off, you don’t have that giant car note hanging over your head every month,” Yoon said. On the other hand, even though cars are in general more reliable than in years past, the cost of repairs has skyrocketed so an older car with more miles may come with some costly repair bills you wouldn’t encounter with a lease.

Are there other considerations?

Yoon said to focus on what works for your budget and finances. The most important thing is really how the numbers work for you, he said. A car or lease payment is likely your second most expensive outlay after housing. “Is it better to commit to this for seven years or for three where I can reassess after three?” he said.

If your life is fairly stable, you want to keep your car for a long time and you don’t want to forever be beholden to a bank expecting money every month, then finance that car purchase, Yoon said.

If you expect to have financial opportunities coming your way, you drive less than 15,000 miles a year and you want the flexibility and perceived freedom to choose a new ride sooner rather than later, then leasing is the way to go, he said.

Contact Eric D. Lawrence: [email protected]. Become a subscriber. Submit a letter to the editor at freep.com/letters.