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According to Edmunds, the average monthly payment in Q1 2025 was approximately $571 for a 36-month lease, compared with $735 for a financed vehicle purchase. The lower payment is one of the biggest reasons millions of Americans choose to lease rather than buy.
Leasing vs. Buying: Which Makes More Financial Sense?
Leasing offers several attractive benefits. Drivers typically enjoy lower monthly payments, a new vehicle every two to three years, and the security of having the car covered by the manufacturer's warranty for most or all of the lease term. That often means fewer unexpected repair bills and access to the latest safety and technology features.
However, leasing has important drawbacks. You never build equity in the vehicle, meaning every payment is essentially the cost of using the car rather than owning an asset. Most leases also include annual mileage limits, commonly around 10,000 to 12,000 miles per year. Exceeding those limits usually results in excess-mileage charges ranging from $0.10 to $0.25 per additional mile, depending on the lease agreement.
Buying a vehicle requires higher monthly payments in many cases, but ownership provides greater long-term value. Once the loan is paid off, drivers can continue using the vehicle for years without a monthly payment. Financial experts often point out that keeping a reliable vehicle for seven to ten years dramatically lowers the total cost of transportation compared with replacing it every few years.
Your annual mileage is one of the most important decision factors. Drivers who travel fewer than 12,000 miles per year and enjoy driving newer vehicles may find leasing to be a practical option. Those who regularly exceed that mileage—or simply want to keep a car for many years—usually benefit more from purchasing and financing instead.
Other considerations include insurance costs, maintenance, flexibility, and lifestyle changes. Lease contracts often restrict modifications and may include charges for excessive wear and tear at the end of the agreement. Owners, on the other hand, have complete freedom to customize or sell the vehicle whenever they choose.
The bottom line is that leasing is generally best for drivers who prioritize lower monthly payments, warranty coverage, and frequent vehicle upgrades, while buying is usually the stronger financial choice for people who drive more than 12,000 miles annually or plan to keep their vehicle for seven to ten years. Looking beyond the monthly payment—and focusing on total ownership cost—is the smartest way to choose between the two.
