Compare the total 5-year cost of leasing a vehicle versus buying one to make the best financial decision.
Residual value is the estimated worth of a car after a certain number of years. If you buy a $40,000 car with a 50% residual value after 5 years, the car will be worth about $20,000.
Leasing spreads payments over 3-4 years for a car you're only using for that period. You avoid depreciation risk, major repairs, and only pay for the "use" rather than the full value. Buying costs more upfront but you own the asset.
For leasing: monthly payments, acquisition fees, and estimated taxes. For buying: down payment, loan payments with interest, and residual value. This doesn't include insurance, maintenance, registration, or fuel—which differ between options.
Buy if you want to keep the car long-term, drive more than 12,000 miles/year, or prefer unlimited customization. Lease if you like new cars every few years, want lower maintenance, or drive under warranty limits.
Yes. Leases typically include 10,000-15,000 miles per year. Excess mileage fees ($0.15-$0.30 per mile) add up quickly. If you drive more, buying usually becomes the better choice.