Buy or lease? It’s a common question whenever you need a new vehicle. While the sales people at a dealership might seem to always push leasing, research shows that it’s actually better to buy. Sure, you can have access to a brand new car every few years if you lease. However, the terms and conditions that accompany a lease are often restrictive, punitive, and downright expensive. In the long run, buying a vehicle and paying it off makes more financial sense. Here are 15 reasons why it’s better to buy your next car than to lease it.

Eventually the Monthly Payments Stop

Dealerships often favor a lease because it basically amounts to never-ending payments. When one lease ends, the dealer puts you right into another one. That ensures the payments will continue forever and ever. The most obvious benefit to buying is that you will eventually pay off the loan and have the satisfaction of driving your car without any monthly payments.

As a general rule of thumb, you should try to buy a car that you can pay off in three-to-five years. Then, keep the car for at least eight years, and drive it payment free. Better yet, use that payment free time to “pay yourself,” creating a car fund for when you eventually need a replacement. Leases may provide lower monthly payments, but those monthly payments never stop.

You Can Sell a Car You Own

When a lease term ends, you return the vehicle to the dealership. What do you get in exchange? That’s right, nothing. However, if you own the car outright, it’s an asset that they can sell — perhaps to use as a down payment on a new vehicle. Sure, a car is a depreciating asset and is never worth as much as you paid for it, but it’s still worth something.

After driving a vehicle for seven or eight years and putting more than 150,000 miles on it, you can still sell it. You might only get a couple grand for it, depending on its condition, but that’s more than you’ll get from disposing a leased vehicle. Selling a car that you’ve been driving payment free for $3,000.00 is still better than returning a leased vehicle to the dealership and getting nothing in return.

You Can Drive as Much as You Want

When you buy a car, you’re free to drive it as much as you want. Whether you drive 5,000 miles a year or 35,000 miles a year, it doesn’t matter. With a lease, however, your annual miles are capped. Most leases limit you to between 12,000 and 15,000 miles per year. Go over the limit and you’ll be paying hefty fees to the dealership when the term is over.

The annual mileage limit is only in place to protect the dealership. It ensures that they can lease the car again once you return it, or they can turn around and sell it second hand. The lower the mileage on a vehicle, the more money they can charge for it. However, this does nothing for you as the driver — except make you constantly worry about how much you’re driving.

There Are No Early Termination Fees

Salesmen often cite cost to sell you on a lease. They will stress that the monthly costs of a lease are almost always lower than the monthly payments of buying. However, what these salesman frequently forget to mention are the potential fees. If you have to terminate the lease early, for any reason, expect to pay handsomely. The early termination fees can be extremely high.

In fact, in most cases, the early termination fees require you to payout the remainder of the lease — all at once. That means that ending the lease early is just as expensive as sticking with the contract until it ends. By contrast, if you buy a car, you can sell it at any time. Yes, even if you still own on the loan. Any money from the sale can be used to pay off that loan or be put towards a new vehicle (if there’s any left).

You’re Still Responsible for Wear and Tear

If you own a car, you won’t really have to worry about the wear and tear on it. Sure, the car is going to slowly lose value as it racks up miles and picks up inevitable dings or scratches. However, those things aren’t really going to cost you extra money.

In a lease, you are responsible for the wear and tear. You can bet that the dealership will find a way to charge you extra for any wear and tear that is considered “excessive or above normal usage.” If that phrase sounds vague to you, it’s because it purposely is.

A lot of dealerships will leave you on the hook for any and all wear and tear on returned lease. What qualifies as “normal wear and tear” is subjective and open to debate. That means the dealerships can slap you with these extra fees as they see fit.

You Can’t Customize a Leased Vehicle

Want to modify your car? Thinking of putting on some new rims or upgrading the stereo? There’s no way you can do either of those things if you lease. When you own the vehicle, it’s yours to do with as you please. Change the paint, add a sunroof, slap on a nice spoiler. Go ahead, add that tacky bumper sticker!

If you lease a car, though, don’t even think about it. You can’t modify it in anyway unless you want to incur huge fees and fines. Since the dealer wants the vehicle returned in good condition for resale, any modifications or custom parts added will need to be removed. If there is any residual damage, you’ll have to pay to have it fixed. It won’t be cheap.

The Upfront Leasing Costs Are Often Higher

Most car salesmen are pretty shrewd. They’ll tell you that it’s easier and cheaper to get into a leased car than to actually purchase one. But hang on a minute. When you buy a car, you typically pay upfront costs that include a down payment, taxes, and registration fees.

In comparison, there are plenty of upfront costs for a lease too. You’ll probably have to pay the first month’s payment, as well as a refundable security deposit, a down payment, taxes, registration and other fees associated with a lease. Some of them sound completely made up, like the “lease initiation” fee. Add these up and the upfront costs associated with a lease are often at least the same as buying. Sometimes they are actually higher. Don’t get sold on lower monthly payments if the upfront costs are higher. It never hurts to do the math.

You Can Finance in a Number of Different Ways

There are a number of options to finance a new car. Best of all, some of them result in not being beholden to the dealership you buy your car from. Sure, you can go the traditional route of financing through the dealership. However, you can also explore a private bank loan, a personal loan from a family member or friend, or a private investment loan. If you’re able, you can also simply pay cash up front.

If you lease, though, you’re stuck with the dealership for the duration of the lease — typically two to four years. You have no other options. The relationship you and the dealership can often changes once the paperwork is signed. However, if you buy a vehicle without financing through the dealer, you can simply drive off and never have to deal with them again, if you don’t want to.

Interest Rates on a Lease Are Usually Higher

Choosing to lease a vehicle doesn’t mean you won’t pay interest on your monthly payments. In the case of a lease, the interest charged is often higher than the rate charged when buying. This is because you don’t actually own the car, and therefore don’t have an asset as collateral. Another reasons is that the cost of a leased car is paid back more slowly, since the principal payments are often lower.

That leaves a greater unpaid balance, or principal amount, at the end of each month that’s subject to interest. Do the math on a lease and you’ll quickly see that most of the monthly payments go towards interest charges, with nothing to show for it at the end of the term. It’s like renting an apartment versus buying a condominium. Lots of payments, but no gaining of assets or increased net worth.

Warranties Are Pretty Good These Days

If you run into any problems with a leased vehicle, you can bring it back to the dealer and have it fixed right away. This is a top selling point of a lease. Let’s be honest, it’s in the dealership’s interest to keep the leased vehicle in tip-top shape. As long as you didn’t cause the damage yourself, the dealer will likely fix it for free because they want to maintain the value of a vehicle they technically still own.

However, the warranties on purchased vehicles are just as good as any protection provided on a leased vehicle. Most manufacturers now offer comprehensive bumper-to-bumper warranties of four or five years, or up to 60,000 or 100,000 miles. That’s pretty good! It means you shouldn’t be on the hook for any repair costs until long after a leased vehicle would have seen its two or four year term expire. The concept of leasing instead of buying because you’re worried about the car suddenly breaking is a silly one.

Leasing Terms Are Deliberately Confusing

The reality when it comes to leasing is that you’ll be attracted to the seemingly lower monthly payments. However, you might not really understand all the terms and conditions associated with a lease. This is by design. The dealerships deliberately make the terms confusing, in an effort to hide all of the associated fees and costs. They also bury anything extra you could have to pay when the lease ends.

The end result is that you’ll be shocked you return a leased vehicle and discover that you’re on the hook for a number of costs you didn’t anticipate. This is basically a trap, and it’s too late once you’re caught in it.  You can avoided it though, by buying a car instead.

Studies Show You Won’t Save Any Money

With all the fees, costs, and extra charges attached to a lease, you’ll usually end up paying the same amount of money as if you simply bought the car in the first place. Studies by several North American consumer groups and automotive magazines have all come to the same conclusion — in the long run, it’s no cheaper to lease a car than it is to purchase it. Yes, even despite the salesman trying to convince you otherwise. The repair and maintenance costs are also no cheaper, and, as we’ve pointed out, anyone who leases a vehicle still has to worry about the mileage and wear and tear. So really, what’s the point?

One Lease Leads to Another Lease

At the end of a lease term, you’re almost always forced to lease another vehicle. The only alternatives are to just stop having a car, or deciding to buy one. And if you’re buying one, why did you just spend three years making payments that didn’t go towards owning anything?

This is a cycle that can seemingly never end, with you going directly from one lease to another. Sure, you get a newer and different car every few years. But the monthly payments never end. That’s exactly how the dealerships want it.

If you buy a car, pay it off in three-to-five years, and then continue driving it for another five years, you’l be much further ahead financially. Or you can just never stop paying monthly lease fees. Even with maintenance and repair costs of aging vehicles, anyone who owns a car will spend less than those who find themselves in a never-ending lease cycle.

You Can’t Negotiate a Lease

Almost everything is negotiable when buying a car. Don’t want to pay for things such as “freight” or “administrative fees”? You can negotiate that. Want to pay a lower amount than the sticker price? Negotiate it. Want the dealer to throw in some extras such as a DVD player, floor mats, or satellite radio? Haggle away. Need a lower interest rate? Fight the salesman for it.

With a lease, only two things are really negotiable — the length of the lease and the annual mileage limit. Even saying that, you’ll often find the mileage is non-negotiable too. To be blunt, there aren’t many deals to be had when leasing a vehicle. You’ll seldom feel that you scored a great deal when driving a leased car off a lot. Most leases are set in stone and ironclad, leaving very little room for any negotiation at all.

Most Leases End With a Person Buying The Vehicle Anyway

When a lease term ends, what does the dealership want the driver to do? Easy. They will push that you simply buy the vehicle you just finished leasing. If you don’t buy that vehicle, then they will push you right into another lease. Really, this is the strongest reason for why you should buy a car rather than lease one.

If you’re going to end up buying the vehicle in the end anyway, why lease it for a few years first? Wouldn’t it make more sense to just forgo the lease altogether and start making payments towards a purchase? It sure would.

You shouldn’t punish yourself financially by taking out another lease. Do the math, consider the real reasons why they car dealership wants you to lease, and then make an informed decision.


This article was worked on by a variety of people from the Autoversed team, including freelancers, editors, and/or other full-time employees.