Skip to main content

How to Buy a New Car: To Lease or Not to Lease

“To lease or not to lease… that is the question.” This same question stumped Hamlet, and it’s still puzzling car buyers today. Learn about the benefits of car leasing vs car buying.

One of my passions is helping people buy vehicles. Over the years I’ve become known as a car-buying resource, giving tips and suggestions to “help you buy a new car.” Today I’m going to give you more information about whether leasing is right for you.

When you buy a new car, you have several options for payment. This applies not just to Toyota, but across all car brands. You can pay cash. You can finance with monthly payments. You can lease with monthly payments.

Let’s say you’ve eliminated paying cash for the car. Now, how in the world will you decide whether leasing is right for you?

For those not familiar with leasing: leasing is just another way to finance a car. There are several benefits to leasing, along with corresponding concerns.

Benefits to leasing

1. Lower monthly payments
I ran a simple payment scenario on financing vs. leasing a 2019 Camry SE. With $3000 down, 72 months financing is $379/month. A 36-month lease with $3000 down (12,000 miles a year) is $211/month. Much lower monthly payment.

2.Choices at end of term
At the end of their 3-year lease, customers have options, choices and flexibility. They can decide they love it and buy it. This means re-financing it around the same payment. The drawback is this extends the length you make payments on the same car. You can also trade your vehicle in for a new one. You will either have positive equity, some negative equity, or break even with your trade. A third option is to turn the car back into the manufacturer. Choices = flexibility.

3. You can get a new vehicle every 3 years
Cutting-edge technology and safety features are coming out at record speeds in the car industry. Stay on top of the latest features by leasing a new one every few years.

4. Can get more features for lower monthly payment
Since leasing offers a lower payment than financing, you can load up your features on a leased car vs. a financed one. For example, take a Camry SE. You can finance a base Camry SE for $379/month for 72 months. If you lease, for that same payment of $379, or less, maybe you can select a Camry that also includes optional blind spot monitor, moonroof and push button start. More features for less or the same payment!

5. GAP insurance included
GAP (or Guaranteed Asset Protection) insurance covers any depreciation incurred to a vehicle lost to depreciation. It is especially necessary in the event your car is totaled in an accident. GAP is required when you lease. Toyota includes GAP insurance when you lease – a huge benefit!

6. Mostly covered by manufacturer warranty
Since most leases are for 3-year/36,000 miles, this means that almost all of your driving will be under a manufacturer’s standard warranty. Also, you are driving your leased vehicle during the best, newest and healthiest times of a vehicle’s life.

Concerns about leasing

1. I drive too many miles
You can add extra miles (For 15k or 18k per year) into your lease. Each increment will raise your payment $15-$20 per month, but it gives you peace of mind.

2. I like owning my car not renting it
This one is interesting, because if you finance, you only “own” your car once it is completely paid off. The bank is the real owner until then.

3. Worried about excess wear
Worried about what happens if you get too many scratches, dings, etc. when you turn in your vehicle? Most leasing companies are pretty conservative when assessing these cosmetic issues and aren’t too harsh with their penalties. You can also ask if your leasing company offers any type of “excess wear” coverage. This will raise your payment some, but again will give peace of mind.

So now the real puzzle for you is “to lease or not to lease… that is your question…” Have you ever leased a new car before? How was your experience? Why do you like or dislike leasing?

You can reach Jeff Teague on Twitter at @toyotajeff1 and tweet him tips for new stories.


Ryan (not verified)    December 3, 2018 - 7:49PM

I’m just amazed at the number of people I know who have car payments but are only saving barely anything for retirement if anything at all.

Alexei (not verified)    December 3, 2018 - 8:14PM

Good lease deal is 1% of MSRP with only 1-month payment due at signing. What Tesla is offering is much higher, so it's definitely financed.

Clark (not verified)    December 3, 2018 - 8:45PM

Lease equals renting and paying for the depreciation of the car. Basically swallowing the dealer's loss. Buy only if it's 0%.