Lease vs Buy Car

How It’s Calculated

Buy Total Cost = Down Payment + Loan Payments + Maintenance − Resale Value
Lease Total Cost = Down Payment + Lease Payments + End-of-Lease Fees (no residual asset)

The key difference is that buying leaves you with a resale asset at the end, while leasing does not.

Example

Buying a $35,000 car with a five-year loan and keeping it seven years often costs less overall than leasing the same car twice over the same period, once resale value is credited back. Leasing tends to win only if you value never owning maintenance risk and always driving a newer vehicle.

Is leasing ever the financially better choice?

It can be for people who want predictable costs, drive under the mileage limit, and prefer trading in for a new car every few years. But over a long ownership horizon, buying is usually cheaper due to the resale value credited back.

Do lease payments include maintenance?

Typically not automatically — most standard leases still require the lessee to cover routine maintenance and are subject to wear-and-tear charges at lease-end.

What happens if I go over the mileage limit on a lease?

Most leases charge a per-mile or per-kilometre overage fee at lease-end, which can add up significantly for above-average drivers, so it should be factored into any lease-versus-buy comparison.