Should You Lease or Buy? Car Ownership Costs Explained

The lease vs buy decision depends on your driving habits, financial situation, and how you value vehicle ownership. While leasing typically offers lower monthly payments (30-60% less than financing), buying builds equity and provides long-term savings after the loan is paid off.

For a $50,000 car over 5 years, leasing would cost approximately $1,100-$1,600 per month (including maintenance) with nothing to show at the end, while buying with a 5-year loan at 6% interest would cost about $950-$1050 per month but you own the asset (worth $20,000-$25,000 after depreciation).

Leasing vs Buying: Key Differences

Monthly Payments: Leasing 30-60% lower than financing
Upfront Costs: Lease requires smaller initial payment (typically 3-6 monthly payments)
Ownership: Buying builds equity; leasing is essentially long-term rental
Mileage Limits: Leases typically limit to 15,000-25,000 km/year (excess fees apply)
Flexibility: Buying allows customization; leases restrict modifications

When Leasing Makes More Sense

- Business Use: Tax benefits for companies and some employees
- New Car Every Few Years: Always drive under warranty
- Cash Flow Sensitive: Lower monthly payments ease budget
- High-Depreciation Vehicles: Avoid massive value drops
- Company Cars: Simplified fleet management

When Buying Is the Better Option

Long-Term Ownership: Keep vehicles 5+ years
High Mileage Drivers: Avoid lease mileage penalties
Customization Needs: Want to modify your vehicle
Building Equity: Own an asset rather than rent
Uncertain Future: No restrictions on selling/changing vehicles