Lease vs. Buy: What's the Smarter Move for Car Shoppers in 2025?

The 2025 Car Market: A Quick Overview

In 2025, the automotive landscape will be influenced by high vehicle prices, significant depreciation rates, and evolving consumer preferences. Electric vehicles (EVs) will be more prevalent, and economic factors like tariffs will impact ownership costs. These dynamics will make the lease-versus-buy decision more complex than ever.

Leasing: Pros and Cons

Pros:

• Lower Monthly Payments: Leasing typically offers lower monthly payments compared to buying. As of early 2025, the average monthly lease payment for new vehicles is approximately $600, a 1.6% decrease from the previous year. ​

• Access to Newer Models: Leasing allows you to drive newer cars with the latest technology and safety features every few years.​

• Warranty Coverage: Most leases coincide with the manufacturer's warranty period, reducing repair costs.​

Cons:

• No Ownership Equity: At the end of the lease, you don't own the vehicle and have no trade-in value.​

• Mileage Limits: Leases often have annual mileage caps, and exceeding them can result in additional fees.​

• Customization Restrictions: Leased vehicles must be returned in near-original condition, limiting personalization.

Buying: Pros and Cons

Pros:

• Ownership: Once you've paid off your loan, the vehicle is yours, and you can keep it as long as you like.​

• No Mileage Limits: You can drive as much as you want without worrying about penalties.​

• Customization Freedom: Owners can modify their vehicles to their liking without restrictions.​

Cons:

• Higher Monthly Payments: Buying usually involves higher monthly payments compared to leasing. In 2025, the average monthly payment for a new car loan is approximately $742. ​Use our loan calculator to help you estimate these monthly payments.

• Depreciation: New cars can lose 20-30% of their value within the first two to three years.​

• Maintenance Costs: After the warranty expires, repair and maintenance costs are your responsibility.

Depreciation: A Key Factor

Depreciation is a significant consideration. For instance, new cars can lose 20-30% of their value within the first two to three years. Leasing can mitigate this risk, as you're not responsible for the vehicle's resale value.

🚗 Best to Lease Example:

Leasing is particularly advantageous for vehicles that depreciate rapidly or have attractive lease incentives. The 2025 Hyundai Ioniq 6 SE Standard Range is a prime example:

• Lease Offer: $169/month for 24 months with $3,999 due at signing.​

• Mileage Allowance: 12,000 miles per year.

• Residual Value: $24,598 at lease end.

• Incentives: Includes a $7,500 EV lease bonus.​

This deal allows you to drive a brand-new electric vehicle with modern features at a low monthly cost, without the long-term commitment or concerns about depreciation. It's especially beneficial if you prefer upgrading to newer models every few years. ​

🚙 Best to Buy Example:

Purchasing is often the better route for vehicles known for their reliability and strong resale value. The 2025 Toyota Tacoma stands out in this regard.

• Starting MSRP: $33,085.​

• 5-Year Resale Value: Retains approximately 64.1% of its original value, equating to about $21,200 after five years.​

The Tacoma's exceptional resale value means you lose less money to depreciation over time. Owning this vehicle can be more cost-effective in the long run, especially if you plan to keep it for several years.

Recommendations

• Consider Leasing If:

  • You prefer driving new cars every few years.​

  • You want lower monthly payments.​

  • You drive within mileage limits and don't plan to customize the vehicle.​

• Consider Buying If:

  • You plan to keep the car for a long time.​

  • You drive extensively and want to avoid mileage penalties.​

  • You prefer to build equity and have the freedom to modify your vehicle.​

Final Thoughts

In 2025, the decision to lease or buy depends on your financial situation, driving habits, and personal preferences. Leasing offers lower monthly payments and access to newer models, while buying provides ownership benefits and long-term value. Evaluate your priorities to choose the option that best suits your needs.

On a Personal Note

Personally, I lean towards purchasing lightly used, well-maintained vehicles that have already undergone significant depreciation. This approach allows me to acquire high-quality cars at a fraction of their original cost, often with some remaining warranty coverage. By avoiding the steepest part of the depreciation curve, I maximize value and minimize financial loss.

Here are two vehicles that exemplify this strategy:

1. 2021 Audi A6 Premium

   • Original MSRP: Approximately $46,445

   • Current Resale Value: $25,240

   • Depreciation: About 45% over three years

   The Audi A6 offers a luxurious driving experience with advanced technology and a comfortable interior. Its significant depreciation makes it an attractive option for used car buyers seeking premium features at a reduced price.

2. 2021 BMW 5 Series

   • Original MSRP: Approximately $48,689

   • Current Resale Value: $26,411

   • Depreciation: About 45% over three years

   The BMW 5 Series is renowned for its blend of performance and luxury. With a substantial depreciation rate, it becomes a compelling choice for those looking to enjoy a premium sedan without the new car price tag.

By focusing on vehicles like these, you can enjoy the benefits of ownership without the steep depreciation associated with new cars.

Note: This article is for informational purposes only and does not constitute financial advice. Always consult with a financial advisor for personalized guidance.