Leasing vs. Buying a Car: Which Costs Less Over 6 Years?

A lease almost always comes with the lower monthly payment. On a $40,000 car the gap is often $90 to $150 a month, and that difference is why so many drivers lease. It is also the least useful number for deciding whether you should.

A better test is what you will have spent, and what you will own, once you are done with the car. We ran the lease vs. buy comparison on a single vehicle using 2026 rates and fees. The result depends almost entirely on one thing: how long you keep the car.

How a Car Lease Payment Is Calculated

A lease payment has two pieces. You pay for the depreciation you use while you drive the car, and you pay a finance charge on the money the leasing company has tied up in it.

• Depreciation charge: (capitalized cost − residual value) ÷ number of months. The capitalized cost is the negotiated price plus any fees rolled into the lease. The residual value is the lessor’s estimate of what the car will be worth when you turn it in, typically 50% to 60% of MSRP on a 36-month lease.
• Rent charge: (capitalized cost + residual value) × money factor. Adding the two values together looks odd at first, but it produces the average balance outstanding over the lease, which is what the lessor is charging interest on.

Most states then apply sales tax to each monthly payment rather than to the full price of the car. Here is how that works on a car with a $40,000 sticker price:

That lands close to the national average. Experian reported an average new lease payment of $617 in the second quarter of 2026, compared with $765 for the average new car loan.

The Same Car, Bought With a Loan

Now take the same $38,000 price and finance it. When you buy, the 6% sales tax ($2,280) applies to the whole price at once. Add $500 in title and documentation fees and a $4,000 down payment, and you are borrowing $36,780.

At 6.15%, which is Experian’s Q2 2026 average new-car rate for prime borrowers (credit scores of 661 to 780), a 60-month loan costs $713.63 a month and $6,038 in total interest. You can check those figures or swap in your own with our Auto Loan Calculator.

The monthly difference is $93. For many shoppers, the comparison ends there. It shouldn’t, because the loan has an end date and the lease cycle does not.

Six Years Side by Side

To compare fairly, both drivers need a car for the same six years. The comparison uses these assumptions:

• The lessee signs two back-to-back 36-month leases on a comparable car at the same terms. That is generous to leasing, because prices usually rise between leases.
• Each lease costs $500 in fees at signing and a $395 disposition fee at turn-in.
• The buyer keeps the car for all six years and sets aside an extra $3,000 for repairs, tires, and brakes in years four through six, after the factory warranty runs out.
• The car is worth 38% of its original MSRP ($15,200) at six years old.
• Insurance, fuel, and routine maintenance are treated as equal for both drivers.

The cash paid is almost identical: $46,449 for the lessee, $46,818 for the buyer (including the down payment). The difference is that the buyer still has a car worth about $15,200. Even after the extra repair budget, buying comes out $11,831 ahead, roughly $164 for every month of the six years.

Keep the car longer and the gap gets wider. Years seven, eight, and nine have no payment at all, while the lessee is on a third lease.

Where Leasing Comes Out Even

The picture changes for someone who wants a new car every three years. To compare that, run the purchase again but sell the car at month 36. At that point the loan balance is $16,077.

All three land within about $1,700 of each other. If you are going to replace the car at three years no matter what, leasing is not a costly mistake. You give up a little money compared with a good private sale, and in exchange you skip the sale entirely. The leasing company also takes on the risk that the car is worth less than the residual. In a year when used-car prices drop, that guarantee is worth something.

The expensive habit is not leasing on its own. It is replacing cars every two or three years, whichever way you pay for them. Early years are when a car loses value fastest, and frequent replacement means you pay for those years over and over.

Costs That Make a Lease More Expensive

The comparison above assumes the lessee stays inside the contract. Several common situations add cost at turn-in:

• Mileage overage. Standard leases allow 10,000 to 15,000 miles a year, and overage typically runs $0.15 to $0.30 a mile. Drive 15,000 miles a year on a 12,000-mile lease and you finish with 9,000 extra miles. At $0.25 a mile, that is a $2,250 bill. If you know you will drive more, buy the miles at signing, when they usually cost less.
• Excess wear. Curb-rashed wheels, worn tires, and interior stains that go beyond normal wear are billed when you return the car. Get an independent pre-inspection a month or two before turn-in so you can fix things more cheaply yourself.
• Ending early. Early termination charges can equal most of the remaining payments. A lease suits you poorly if a move, a new baby, or a job change might make you want out within the term.
• Insurance requirements. Lessors usually require higher liability limits than your state’s minimum, plus comprehensive and collision coverage, which can raise your premium.

When Leasing Makes Sense

Leasing is the reasonable choice in a few specific cases:

1. You will replace the car every two or three years anyway. As the three-year table shows, the costs are close. Leasing buys convenience and protection against a falling resale market.
2. The manufacturer is subsidizing the lease. Carmakers sometimes set an unusually low money factor or a high residual to move a slow-selling model. When that happens, the payment can come in well below the math above. Convert the money factor and compare the residual with what similar three-year-old cars sell for today.
3. You use the vehicle for business. The business-use share of lease payments may be deductible, and the paperwork can be simpler than depreciating a purchased car. Rules and limits differ, so check with a tax professional before you count on this.

Buying is usually the better deal if you keep cars six years or longer, drive more than about 15,000 miles a year, are hard on interiors, or want to modify the car. If buying a new car stretches your budget, look at a two- or three-year-old version of the same model. Someone else has already absorbed the steepest depreciation.

How to Compare Your Own Quotes

1. Ask the dealer for the full lease worksheet: capitalized cost, residual value, money factor, fees, and mileage allowance. A quoted monthly payment alone is not enough to compare.
2. Negotiate the capitalized cost the same way you would a purchase price. It is not fixed.
3. Multiply the money factor by 2,400 to get the APR.
4. Get a pre-approved loan rate from your bank, a credit union, or an online lender. Your credit score sets that rate, and the same score drives the money factor you qualify for.
5. Run the loan through the Auto Loan Calculator, then work out each option’s net cost for the number of years you will realistically keep the car: total cash paid minus the car’s value at the end.
6. Check the payment against your budget. Our guide to how much car you can afford walks through the income tests, and the true cost of a car loan covers the dealer add-ons to watch for in either deal.

Common Questions

Is it better to lease or buy a car in 2026?

For most people who keep their cars longer than three years, buying costs less. In the example above, buying and keeping the car for six years saved about $11,800 compared with leasing back to back. Leasing is competitive only when you replace the car every two to three years, or when a manufacturer subsidy pushes the payment below normal.

Can you negotiate a car lease?

Yes. The capitalized cost, the money factor (up to the lessor’s base rate), dealer add-ons, and sometimes the acquisition fee are all negotiable. The residual value is set by the leasing company and usually is not.

Does a lease affect your debt-to-income ratio?

Yes. Lenders count a lease payment as a monthly debt just like a loan payment, so it affects your debt-to-income ratio if you apply for a mortgage during the lease. You can check where you stand with the Debt-to-Income Calculator.