A lease payment is always lower than a car payment. That's not because leasing is cheaper — it's because you're comparing the wrong numbers. Here's what actually matters.
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:
- Monthly payment: $299 × 36 months = $10,764
- Acquisition fee (upfront): $695
- Lease-specific insurance (higher than ownership): $120/month × 36 = $4,320
- Maintenance (usually included, but you pay for excess wear): $300 average
- Mileage overages (typically $0.25 per mile over 12,000/year): if you drive 15,000/year, that's 3,000 extra miles × 3 years = 9,000 miles × $0.25 = $2,250
- Disposition fee (end of lease cleanup): $395
Total three-year lease cost: approximately $18,724
The actual purchase cost
Same car, financed over five years (because you'll keep it longer than a lease):
- Down payment: $6,000
- Monthly payment: $450 × 60 months = $27,000
- Insurance (standard ownership): $100/month × 60 = $6,000
- Maintenance and repairs: $150/month × 60 = $9,000
- Registration and taxes (varies by state): $500/year × 5 = $2,500
- Total spent: $50,500
But here's the part that changes everything: after five years, you sell the car for $12,000 (typical for a five-year-old car in decent condition).
Net cost of ownership: $50,500 − $12,000 = $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.
The takeaway
Don't compare just the monthly payment. Calculate the total cost including insurance, maintenance, fees, and mileage overages for a lease, versus the total spent minus resale value for a purchase. Usually you'll find that buying and holding for five-plus years costs less in total, even if the monthly number looks higher.