The idea of leasing a vehicle is an enticing option for many car shoppers. Driving a brand-new car off the lot every few years with flexible, affordable payment options makes it even more so, especially in an already high-priced car, truck, and SUV market.
Leasing can make sense as a short-term plan depending on your driving preferences, automotive goals, flexibility needs, and financial situation. Still, it does come with restrictions that are worth considering before signing on the dotted line.
So, is leasing a car worth it? Here we'll examine the advantages and disadvantages of leasing.
When Leasing a Car Might Make Sense
There are specific scenarios in which leasing makes more financial sense than buying a car. Whether leasing a car is a good choice for your situation will depend on your personal finances, driving needs, and whether your credit allows you to qualify for a lease. Leasing is typically reserved for borrowers with good credit, and if you're struggling with credit issues, leasing may not be easy, or even possible.
Here are a few scenarios where leasing makes sense:
You Want Lower Monthly Payments
Leasing a car can be a more affordable option if you're looking for lower monthly payments – especially with a lower credit score. For subprime consumers, new lease payments averaged $624 in the third quarter of 2025, while the average car payment for a new vehicle purchase was $780, according to Experian’s State of the Automotive Finance Market report. Top credit earners saw an average lease payment as low as $592 for the same quarter, while new car loans had an average payment of $727.
Leases have lower monthly payments because you are paying for the value of the car during a predetermined amount of time (typically two to three years), plus interest and fees. With a car loan, you pay for the full amount of the car, build equity, and own the car – all things you avoid in a lease.
Additionally, you may not have to pay a down payment on a lease. Making a down payment on a lease doesn't change your overall cost; it just means that your payments will be even lower since you're paying some of the lease upfront.
You Prefer Driving a New Car Every Few Years
If you covet having something shiny and new, a lease could be the right way to go. In general, leasing is offered on new vehicles. That's because lenders can project what the car's depreciation value will be over the course of two to three years.
After two to three years, you can return the lease and drive away again in a brand-new model.
You Don't Want to Worry About Long-Term Repairs
Leases are typically covered by manufacturer warranties, which often cover mechanical repairs and maintenance costs during your lease term. That can save you the potential financial headache of expensive repairs should any defects or malfunctions arise.
It's important to know what your warranty terms are, too. Routine maintenance, like oil changes and tire rotations, is not always covered and will be an out-of-pocket expense for you. So be sure to read your warranty thoroughly.
You Have Predictable Driving Habits (Within Mileage Limits)
Car leases come with mileage limits, with most offering between 10,000 and 15,000 miles per year. Leasing a car is smart if you have a short commute or don't drive far regularly.
If you're an avid road-tripper, you might want to reconsider leasing. Most leases include fees for extra mileage, averaging around 25 cents per mile if you go over the allocated miles at the end of your term. To avoid this extra fee, you can typically purchase more miles upfront for a lower price, usually around 10 cents per mile.
You Have Short-Term or Transitional Needs
Leasing might also be ideal if you need a car temporarily, say for a new job or move. Short-term leases offer financial benefits during transitions by keeping payments and repair costs predictable.
In addition, returning a lease can be hassle-free compared to a trade-in deal or having to sell your car.
It is possible to buy your car once your lease is up. The purchase price should be listed in your lease agreement, and you can shop around to find the right price if you go this route.
When Leasing a Car Might Not Make Sense
Leasing a car might not be the best fit for your situation if you drive a lot, like customization options, plan to keep the car long term, or have poor credit.
Lease mileage restrictions and fees for excessive wear and tear may not be a good fit for high-mileage drivers. Additionally, when you return the car at lease-end, you have no equity in it that you could apply to another vehicle.
Plus, if you have a lower credit score, you may not qualify in the first place. Leasing is more common for those with higher credit scores, and bad-credit lessees may find they have an easier time qualifying for a car loan than a lease.
Buying is often smarter for drivers who want to customize their rides, want flexibility with mileage, and build equity to eventually sell it or negotiate a trade-in.
Final Thoughts: Is Leasing Right for You?
Considering your financial situation, driving preferences, needs, and long-term goals is key to determining if leasing a car is the best option for you.
If that brand-new car smell captivates you, you're not concerned about equity, and don't want to get hit with large repair bills, leasing could be ideal.
It's important to note that not everyone will qualify for a lease. It can be more challenging to get approved for a lease with bad credit than for an auto loan. If you have poor credit, you might want to consider financing, especially through a subprime lender that is equipped to deal with lower credit situations.
FAQs
Does a lease for your first car make sense?
Leasing your first car could be potentially beneficial if you are able to secure a lease. When you're looking for lower monthly payments and do not want to pay a large down payment, leasing is a good option, but again, it depends on your current situation and needs.
Who benefits most from leasing a car?
In addition to infrequent drivers, serial upgraders, and warranty-conscious drivers, small businesses and self-employed drivers can also benefit from leases. Monthly lease payments can be written off as business expenses if the car is used for business.
Does leasing a car make insurance higher?
Car insurance can be more expensive on a car lease because there are often extra requirements, but it depends on a variety of factors.
Lease agreements may require more coverage, including collision, comprehensive, and higher liability limits. There could also be gap insurance requirements, which cover the difference between the amount owed and the car's value in case it gets totaled.
Do you pay for maintenance on a leased car?
Yes, a lessee is usually responsible for paying for routine maintenance like oil changes and tire rotations.
Is leasing a car good for your credit?
Like an auto loan, leasing a car can be good for your credit. A lease deal is essentially an installment loan, which is reported to credit bureaus. A positive on-time payment history will appear on your credit report and help you build credit.
Is leasing a vehicle 100% tax-deductible?
No, leasing a vehicle typically isn't tax-deductible. The tax benefits of leasing a car can apply to small businesses, though. Monthly payment can be 100% tax-deductible if the car is used for business purposes. However, if a car is used for business and personal use, it can only be written off for the percentage it is used for business purposes.
