A lease payment will almost always beat a car payment on the sticker. That doesn't mean leasing is cheaper — it means the dealership is banking on you comparing the wrong two numbers. Let's compare the right ones instead.
Why lease payments look so good
A lease on a $30,000 car might cost $299/month. Financing that same car costs $450/month. So leasing wins, right? No — you're only looking at one line item. The real cost includes insurance, maintenance, mileage overages, acquisition fees, disposition fees, and the fact that at the end of a lease you own nothing.
The actual lease cost
Over a three-year lease on a $30,000 car:
| Line item | Cost |
|---|---|
| Monthly payment ($299 × 36 months) | $10,764 |
| Acquisition fee (upfront) | $695 |
| Lease-specific insurance ($120/mo × 36) | $4,320 |
| Maintenance (excess wear) | $300 |
| Mileage overages (9,000 mi over cap × $0.25) | $2,250 |
| Disposition fee (end of lease) | $395 |
| Total three-year lease cost | $18,724 |
The actual purchase cost
Same car, financed over five years (because you'll keep it longer than a lease):
| Line item | Cost |
|---|---|
| Down payment | $6,000 |
| Monthly payment ($450 × 60 months) | $27,000 |
| Insurance ($100/mo × 60) | $6,000 |
| Maintenance and repairs ($150/mo × 60) | $9,000 |
| Registration and taxes ($500/yr × 5) | $2,500 |
| Total spent | $50,500 |
| Resale value after 5 years | −$12,000 |
| Net cost of ownership | $38,500 |
Two three-year leases ($18,724 × 2 = $37,448) costs almost the same as buying once and owning for six years. But the buyer keeps the car; the leaser walks away empty-handed both times.
When leasing actually makes sense
Lease if: you drive under 12,000 miles per year, you like a new car every three years, you don't want to deal with selling, and you're comfortable with mileage caps and wear-and-tear fees.
Buy if: you drive more than 12,000 miles annually, you keep cars longer than five years, or you drive for business (lease payments are 100% tax-deductible if the car is used for business).
The real question isn't payment — it's priority
Do you want the lowest monthly payment right now, or the lowest total cost? Those are different questions with different answers. Leasing wins on payment. Buying wins on total cost, almost always, once you keep the car past three years.
Bottom line
Don't stop at the monthly payment — that's the number designed to look good. Work out the total cost: insurance, maintenance, fees, and mileage overages on a lease, versus everything spent minus resale value on a purchase. Run both, and buying tends to win once you keep the car past five years, even though the payment on paper looks bigger.
Frequently asked questions
Is it cheaper to buy or lease a car? Buying is usually cheaper in total cost past three to five years, even though the lease payment looks lower monthly — leasing wins on payment, buying wins on total cost.
When does leasing actually make sense? If you drive under 12,000 miles a year, like a new car every three years, and are comfortable with mileage caps and wear-and-tear fees.