Should I lease or buy a car?
The short answer
Buy used and hold 7+ years for the lowest lifetime cost. Lease only if you need the car for business write-offs, want a new car every 3 years anyway, or drive under the mileage cap.
Signals to weigh
- 01Annual mileage — leases penalize 15k+ miles per year.
- 02Business use — leases can be more tax-efficient for self-employed.
- 03How long you keep cars — buying wins past year 5.
- 04Cash on hand — buying used with cash beats every financed option long-term.
How to decide
- Step 1Compute total cost over 7 years for each option, including insurance and maintenance.
- Step 2For leases, add likely overage fees and end-of-lease wear charges.
- Step 3For buying, model resale value at year 7.
- Step 4Choose the option with the lowest 7-year total that fits your cash flow.
Framework used
Cost-Benefit Analysis →Full walkthrough of the framework, with examples and pitfalls.
Consider these alternatives
- ·Buy a 2-3 year old off-lease vehicle — depreciation absorbed, warranty often remaining.
- ·Skip car ownership entirely if you're in a walkable city with ride-share access.
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