With car prices at record highs, many Americans are turning to leasing to keep monthly payments low. But is leasing actually cheaper, or is it a financial trap?

Buying: The Long Game

When you buy (finance) a car, your monthly payments are higher because you are paying for the whole car. However, once the loan is paid off, you own an asset with value.

• Pros: No mileage limits, you own it, cheaper in the long run (10+ years).
• Cons: Higher monthly payment, responsible for repairs after warranty.

Leasing: The Monthly Payment Hack

When you lease, you are essentially renting the car for 3 years. You only pay for the depreciation (value lost) during that time.

• Pros: Lower monthly payments, always drive a new car, under warranty.
• Cons: Mileage limits (usually 10k-12k/year), never build equity, expensive fees to terminate early.

The Verdict

If you drive less than 12,000 miles a year and love having a new car every 3 years, Lease.

If you drive a lot, want to keep a car for 7-10 years, and hate car payments, Buy.