Buy vs lease a car: which is better?
The short answer
Buy a 2-3 year old reliable car with cash or a short loan, and drive it 8+ years. Lease only if you need a specific new car for business, or write it off, and you drive under 12k miles/year.
Signals to weigh
- 01Total cost over 8 years — buying used and keeping it wins by tens of thousands.
- 02Annual mileage — leases penalize heavy drivers.
- 03Whether the car is a personal expense or a business writeoff.
- 04Whether you value new-car features enough to pay the depreciation curve.
How to decide
- Step 1Model 8-year cost: purchase + maintenance vs 4 lease cycles.
- Step 2Check reliability data on the specific make/model — a bad car turns any math wrong.
- Step 3If buying, target 2-3 year old with sub-40k miles.
- Step 4Avoid negative-equity trade-ins — they roll old debt into a new payment you can't see.
Framework used
Cost-Benefit Analysis →Full walkthrough of the framework, with examples and pitfalls.
Consider these alternatives
- ·No car — if you're in a walkable/transit-served city, the math often crushes both.
- ·Car-share or rentals for occasional needs — often cheaper than ownership under 5k miles/year.
Run this decision inside Compass
Get a personalised answer to your version of this question.
Free · Private · Actionable
Begin