Leasing vs. Buying a Car — Which is better?

Should you buy or lease your car? Lease vs. finance is a common question, and an important financial decision many must make. There's not an easy, one-size-fits all answer, and it that deserves careful consideration. On one hand, leasing usually leads to lower car payments. On the other hand, buying means you own the vehicle once you finish making car payments. There are lots of other variables to consider, among them the amount you drive and how likely you are to keep your car in good condition. Here are some tips to figure out whether buying or leasing is right for you.

This is part of our <a href=«http://www.autoblog.com/2018/01/10/car-buying-dealer-terms-glossary/» data-ylk=«elm:context_link;itc:0;pos:1;sec:donut-hole;cpos:2;» data-rapid_p=«7» data-v9y=«1»>Car Buyer's Glossary. series breaking down all the terms you need to know if you're buying a new or <a href=«https://www.autoblog.com/used/» data-ylk=«elm:context_link;itc:0;pos:1;sec:donut-hole;cpos:3;» data-rapid_p=«5» data-v9y=«1»>used car

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Leasing a car is much like leasing an apartment. You sign a contract, to pay a fixed price, to cover a fixed mileage, over a fixed period of time. Your monthly lease payment depends on several factors, including the vehicle's price, your down payment amount and the number of miles allowed per year. As a general rule, leasing is cheaper per month than buying, all other things being equal. Considering how expensive cars have gotten — the average transaction price of a new vehicle is about $44,000 in 2024 — lower monthly payments are attractive to a lot of people shopping for a new car. A recent report from LendingTree indicated that the average monthly payment for a new vehicle loan in Q4 of 2023 was $738. Some payments are much higher, while lease payments average about $606 according to the same report.

Another leasing option is the one-pay lease. Paying for the whole lease in one lump sum can save you significant money in fees, but you need to have the cash on hand. It's not for everyone. Leases are cheaper