By Meraj Uddin Provat · Last reviewed September 9, 2026 · Editorial Standards
The average new car lease costs $619 a month. The average new car loan costs $770 a month. Leasing looks like it saves you $151 every month — and that comparison is completely meaningless. Here is what the two options actually cost, using current 2026 market data.
The 2026 numbers
| Input | Value | Source |
|---|---|---|
| Average new-vehicle transaction price | $49,855 | Kelley Blue Book / Cox Automotive, July 2026 |
| Average new-vehicle lease payment | $619/mo | Experian, Q1 2026 |
| Average new-vehicle loan payment | $770/mo | Experian, Q1 2026 (record high) |
| Average new-car loan APR | 6.39% | Experian, Q1 2026 |
| Share of new vehicles leased | 24.1% | Experian, Q1 2026 |
Why the monthly payment comparison is a trap
A loan payment buys the entire car. A lease payment buys only the depreciation that happens while you hold it, plus interest. At the end of the loan you own a vehicle worth thousands of dollars. At the end of the lease you own nothing and hand back the keys.
So the $151 monthly gap is not a saving. It is the price of the asset you are choosing not to build. Any honest comparison has to run to the end and count what you are holding.
Three years: leasing genuinely wins
Take a $49,855 vehicle. Lease it at $619/month with $3,000 due at signing, or buy it with 10% down and a 60-month loan at 6.39% — a payment of $875.61.
| After 36 months | Lease | Buy |
|---|---|---|
| Cash paid out | $25,284 | $36,508 |
| Still owed | $0 | $19,678 |
| What you own | Nothing | Car worth ~$27,420 |
| Net cost | $25,284 | $28,766 |
Assuming the car holds 55% of its value after three years, leasing comes out about $3,482 ahead. That is a real result, not a rounding error. If your honest plan is to change cars every three years, leasing is defensible.
The number that decides it: resale value
Everything hinges on what the car is worth at year three. Run the same comparison across retention rates:
| Value retained at 3 years | Resale value | Buy net cost | Lease net cost | Buying is ahead by |
|---|---|---|---|---|
| 40% | $19,942 | $36,244 | $25,284 | −$10,960 |
| 50% | $24,928 | $31,258 | $25,284 | −$5,974 |
| 55% | $27,420 | $28,766 | $25,284 | −$3,482 |
| 60% | $29,913 | $26,273 | $25,284 | −$989 |
| 62% | $30,902 | $25,284 | $25,284 | Tie |
| 65% | $32,406 | $23,780 | $25,284 | +$1,504 |
| 70% | $34,898 | $21,287 | $25,284 | +$3,997 |
The break-even is 62% retention. Above that, buying wins even on a three-year horizon. Below it, leasing wins. This produces the counterintuitive rule that follows: the car worth leasing is the one that depreciates badly. If a vehicle holds its value well, you are better off owning it — and the leasing company knows this, which is why strong-residual models carry the most attractive lease terms.
Past year three, buying wins and never stops
The three-year comparison flatters leasing because it stops at the exact moment the buyer has absorbed the worst depreciation and is still carrying loan debt. Extend the horizon and compare buying and keeping against rolling into a new lease every three years, with lease payments rising 3.2% per cycle to match Experian’s reported year-over-year increase:
| You keep the car | Buying costs | Rolling leases cost | Buying saves |
|---|---|---|---|
| 3 years | $28,766 | $25,284 | −$3,482 |
| 5 years | $36,583 | $44,910 | +$8,326 |
| 6 years | $39,076 | $53,074 | +$13,998 |
| 8 years | $43,563 | $74,644 | +$31,081 |
| 9 years | $45,059 | $83,618 | +$38,559 |
| 10 years | $46,554 | $97,463 | +$50,909 |
The crossover lands at roughly month 37 — almost exactly the day your first lease would have ended. Leasing wins right up until that moment, then loses permanently and by widening margins.
The nine-year comparison is the one worth sitting with. Rolling leases cost $83,618 and leave you owning nothing. Buying the same car and keeping it costs $45,059 and leaves you holding a vehicle still worth about $12,464. Same transport, $38,559 apart.
What the model leaves out
Three real factors sit outside these numbers. Repairs favour leasing, since a leased car is under warranty for its whole term while a nine-year-old car is not; budget for this if you buy and hold. Mileage limits favour buying, because lease overage charges of 15 to 25 cents per mile add up fast if you drive more than 12,000 miles a year. And business use can change the tax treatment of a lease entirely — check with an accountant if that applies to you.
One more caution: our $875.61 loan payment is higher than the $770 average Experian reports, because the average buyer finances less than the full average transaction price and stretches the term past 60 months. A longer term lowers your payment and raises your total interest. Over 60 months this loan costs $7,667 in interest.
The short version
Replacing your car every three years regardless? Lease — you are paying for a service, and it is priced fairly. Keeping a car five years or more? Buy, and the advantage compounds every year you hold on. The one question that actually decides it is not the monthly payment. It is how long you will keep the car, answered honestly rather than optimistically.
Run your own numbers
Lease terms vary enormously by model and residual value, so the averages above will not match your quote. The free Lease vs Buy Car Calculator runs this same comparison with your actual lease payment, due-at-signing amount, loan rate and expected resale value — no signup required.
Working out the budget first? The Car Affordability Calculator shows what price fits your income, and how much car you can afford in 2026 walks through the rules of thumb. For a purchase, the Auto Loan Calculator breaks down payment and total interest. Already financing at a high rate? Compare options with the Auto Refinance Calculator and read whether refinancing your car loan is worth it.
Methodology
Model assumes a $49,855 vehicle; lease at $619/month for 36 months with $3,000 due at signing; purchase with 10% down ($4,986), a $44,870 loan at 6.39% APR over 60 months for a payment of $875.61. Buy net cost equals cash paid plus any remaining loan balance minus resale value. Rolling-lease scenarios assume a new 36-month lease every three years with payment and signing cost rising 3.2% per cycle. Value retention of 55% at three years is an assumption representative of a mainstream vehicle, not a measured figure; individual models vary widely. Excludes insurance, fuel, registration, maintenance, repairs and mileage-overage charges.
FAQ
Is it cheaper to lease or buy a car in 2026?
Over a three-year window, leasing is usually cheaper. On a $49,855 vehicle, three years of leasing costs about $25,284 while buying and selling at year three costs about $28,766. Past three years the result reverses permanently: hold the car nine years and buying costs roughly $38,559 less than rolling leases.
Why is my lease payment so much lower than a loan payment?
A lease only charges you for the depreciation during the lease term plus interest, not the full price of the car. Experian data for Q1 2026 shows the average new lease payment at $619 versus $770 for the average new loan payment. The lower payment is not a discount; it is a smaller purchase.
How long do I need to keep a car for buying to be cheaper than leasing?
About 37 months in our model, which is essentially the month your first lease would have ended. Buying is behind for the first three years because of the down payment and heavy early depreciation, then pulls ahead and keeps widening the gap for as long as you keep the car.
Is leasing ever the better financial choice?
Yes, in two cases. If you genuinely replace your car every two to three years no matter what, leasing avoids the resale hassle at similar cost. And if the vehicle holds more than about 62% of its value after three years, buying and selling at year three actually beats leasing it, so a poor-residual vehicle is the one worth leasing.
Does the average car payment of $770 mean I should lease?
No. The $770 average new-car loan payment reported by Experian for Q1 2026 buys you an asset; the $619 average lease payment does not. Comparing the two monthly numbers directly is the single most common mistake in this decision. Compare total cost over your actual ownership horizon instead.