Dear Johnny Q&A: Should I Lease or Buy My Next New Vehicle?
Question: Should I lease or buy my next new vehicle?
Thank you for the question! Assuming you already read our Should I Buy A New Vehicle Post and you meet the recommended requirements for buying a new vehicle (read them carefully), I will compare leasing and buying options for a new vehicle.
New vehicles depreciate on average 70% the first 10 years of ownership. If you paid $50,000 (the average price for a new vehicle) for a new 2026 F-150 truck, 10 years later it is worth approximately $15,000. You would be losing $292 per month, every month over 10 years in depreciation. That does not include repairs after the initial warranty runs out. Average annual car repairs for vehicles out of warranty but less than 10 years old are approximately $800/year or $67 per month. If you total up $292 per month in depreciation and $67 per month in average repair costs, that equals $359/month. If you finance this vehicle for 60 months at 5% interest with 10% downpayment you would be paying $5,240 in total interest or $87/month over the life of the loan. If you paid cash for the $50,000 truck, you would be losing out on a potential return of $8,670 if you had invested that money at 3.25% in a high yield savings account for 60 months ($144.50 per month average loss).
Total cost of ownership the first 10 years of owning a new vehicle:
(not including normal maintenance)
Financing route:
Depreciation $292/month
Repair costs $67/month
Payment + interest $754/month (40k borrowed for 60 months at 5%)
The first 5 years: $1113/month
The second 5 years: $359/month
Average = $736/month
**Your vehicle is still worth $15,000 year 10, which reduces total out of pocket costs**
Average =$611/month
Paying Cash:
Depreciation $292/month
Repair costs $67/month
Lost opportunity cost over 10 years $72/month (if invested at 3.25%)
Lost opportunity cost over 10 years $196/month (if invested at 8%)
$503 - $555/month for 10 years
**Your vehicle is still worth $15,000 year 10, which reduces total out of pocket costs**
Average =$378-$430/month
20% of car buyers lease their vehicle. The average annual lease in 2025-2026 was $478-$659 per month for 36 months and 12k annual mileage allowance. These numbers are very similar to the finance options. Only 15% of people pay cash.
Now where this debate gets interesting is the repair costs in years 4-10 for those keeping their vehicles longer than 36 months. Most bumper-to-bumper warranties expire after 36 months leaving the owner responsible for everything but the drivetrain. Today's vehicles are loaded with electronics, sensors, and insane LED lights which result in very high repair bills. In 2025 the average labor rate per hour was $142/hour. For moderate repairs such as water pumps, struts, or an alternator, labor hours range 3-6 hours or $426-$852 in labor, not including parts. Last year both my taillights in my 2023 F-150 stopped working. According to the mechanic it was due to broken seals which resulted in the lights going out. The total cost of repair to replace 2 rear taillights was $1,485!!! Luckily it was under warranty, but this was about $1,300 more than I figured it would be. A handful of times my console screen stopped working when the temps were under 10 degrees and every sensor alarm rings when it is to foggy, rainy, muddy or cold out. All this leaves me questioning the durability of new vehicles.
Is purchasing a new vehicle smart? No. If you are a high net worth individual and want to splurge, go for it. If you insist on buying a new vehicle, I no longer have a strong opinion on buying versus leasing. At this point I am leaning slightly towards leasing being the better option. You get a new vehicle every 2-3 years and no headaches. You will always have a payment with a lease, and no equity but you aren't losing out on depreciation, costly unknown repairs, and lost opportunity costs with your cash.