How Much Does It Cost to Lease a Car?

Pandemic shortages are retreating to the rearview mirror, and most automakers have plenty of cars to sell. That has brought a return to more automaker sales incentives to help “move the metal,” including lease deals teased with budget-friendly monthly payments. While the lease payments look attractive compared with loan payments for the same vehicle, they don’t really answer the question of how much it costs you to lease versus buying the same car.

Related: How Do I Calculate if a Lease Is a Good Deal?

A full answer is complicated, but as a general rule, it will be cheaper over the long term to buy the car. Lease payments are lower because you’re only paying the difference between the price of the vehicle and its value at the end of lease (typically 36 months plus fees). In the end, you have no equity in the car; it instead is given back to the lessor — after paying for the years of highest vehicle depreciation. Most importantly, while the lease payment will be lower, you’ll never not have a payment. At the end of the lease, you’ll need to lease another vehicle or buy one (now with no trade-in) to continue having a car to drive. That said, leasing can work for some people, as it’s a way to always have a relatively new car (and possibly a fancier car) than you could otherwise afford.

Cars.com has more detailed coverage of leasing pros and cons, as well as deals. But to help illustrate things to consider, below is a real-world example of leasing versus buying based on examples of some good lease and loan deals being offered by Hyundai for a base 2025 Tucson SE — a popular compact SUV that tends to retain its value over the years — at the time of this writing.

There are many variables that could affect the lease or loan terms, including adding options or higher trim levels or subtracting in-stock discounts. But most important for the best advertised deals is your credit history; the fine print will tell you the best terms are limited just to “fully qualified” shoppers, i.e., those with spotless credit scores. These deals also do not include applicable taxes, title and tag fees, nor any dealer fees, which you’ll have to pay before driving home.

How Much Does It Cost to Buy?

You can buy that 2025 Tucson SE, which arrives at dealers in August, for $29,750 (including destination charge). That’s the total cost if you pay cash.

If you want to finance that Tucson, however, Hyundai is offering a discounted 1.99% loan rate for 36 to 60 months. At that rate for 36 months, which is comparable to the lease term, and with a down payment or trade-in of $3,999 (comparable to the cash upfront required by Hyundai’s lease deal), the monthly payment would be $737.46 for a total cost of $30,547.56. After it’s paid off, you’d then own an SUV that you could keep driving with no monthly payment, or you could sell or trade it in using the equity you built up. The estimated trade-in value now of a 3-year-old base Tucson is about $16,000 to $17,000, according to a Consumer Reports calculator.

Alternatively, you could stretch the loan at 1.99% to as many as 60 months under the financing offer. With $3,999 down, the payment would drop to $451.24, though you’d pay more interest over the loan term and take longer to own the SUV outright.

How Much Does It Cost to Lease?

Keep in mind that when you lease a vehicle, you’re renting it, not buying, so you won’t be paying the full price. Instead, you’ll be paying a lease payment based on the difference between the new-vehicle price and the depreciated residual value of the vehicle at the end of the lease term — plus any fees and an interest rate (or “money factor” in leasing language). This is because the leasing company, which is the car’s owner, is actually lending you the money to cover the depreciation.

Currently, Hyundai is offering a 36-month lease on a base Tucson SE for an attractive $249 monthly payment, though with $3,750 plus the first payment due at signing (hence, $3,999 total). The total you’d pay at signing and for the remaining 35 payments would be $12,714. That’s not the total cost of the lease, however, because there can be several additional costs when you lease a vehicle, which can include the following:

Higher Insurance Costs

The leasing company might require more insurance than you normally carry, such as higher coverage limits or comprehensive coverage for damage. You’ll also need gap insurance (guaranteed asset protection) if it’s not already included in the lease; it covers the difference between what you owe on the lease — you’re responsible for the full value of the car — and what your insurer will pay if the car is totaled or stolen.

A Fee to Turn in the Car

The charge for returning the car, called a disposition fee, can be anywhere from around $350 up to $1,000 for some luxury brands. In the Hyundai example above, it will cost an additional $400 fee when you turn in the car.

Extra Mileage Charges

Drivers of leased cars can pay up to 25 cents per mile for any miles above the number allowed in the lease. In the Hyundai example, the lease allows 10,000 miles per year and the charge is 20 cents per mile for more than 30,000 on the odometer at lease end. An extra 5,000 miles on the Tucson would result in a $1,000 charge.

Wear-and-Tear Charges

The leasing company expects the car back in a condition that’s ready to sell with minimal preparation. What you might consider normal damage over three years of use — a dent here, a scratch there, a spot on the backseat — can cost you when you turn in the car. For example, GM’s leasing guide outlines what it considers normal wear and tear. Alternatively, most automakers offer extra-cost insurance for the lease that will cover excess wear-and-tear charges at lease end.

What About Buying the Vehicle After the Lease?

Some leases allow you to purchase the vehicle at lease end for the price (the predicted residual value) that was written into the lease. Why would you buy? You might be looking to avoid charges for mileage or wear and tear by buying the vehicle at the end of the lease, or maybe the vehicle just grew on you and you don’t want to give it back. However, the residual price in the lease might or might not look like a good value in three years, and there might also be a fee for exercising the purchase option. You would also have to pay cash or get a loan to buy the car, which would then carry higher used-car interest rates.

In the 2025 Hyundai Tucson example, the lease allows the lessee to buy the SUV at lease end in most states for $19,338 plus a $300 purchase option fee. Your total cost for the Tucson’s lease and the end-of-lease purchase would be $32,352 plus the total interest for any financing.

More From Cars.com:

• How Does Leasing a Car Work?
• Glossary of Car Leasing Terms
• Which Companies Offer Leasing for Certified Pre-Owned Cars?
• Can You Lease a Used Car?
• How to Get Out of a Car Lease
• What Is an Acquisition Fee for an Auto Lease?
• What Is an Auto Lease Disposition Fee, and Can You Avoid It?
• Can You Lease a Car With Bad Credit?
• Can I Trade in My Car on a Lease?
• More Leasing News

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