Guide to Buying vs. Leasing a Car in 2023

Back to Financial Insights

Is leasing a car a good idea in 2023? With Richmond, VA auto prices finally coming down but interest rates still high, deciding between leasing vs. buying a car remains a tough call for many people. Is owning your vehicle important to you? Or, do you prefer the security of knowing you are driving a newer vehicle that is as safe and reliable as possible?

Below we take a look at some important factors to consider when deciding between buying vs leasing a car. We’ll consider some of the major advantages and disadvantages of both leasing and financing and look at when choosing one or the other option makes the most sense.  

Read on to learn more about when to lease vs. buy a car.

Wheel Deal: When Is Leasing a Car a Good Idea?

Leasing a car can be tempting. You get to drive the latest model vehicle and trade it in for a brand-new car every few years. And you’ll often pay less per month than you would on most auto loans. 

As with any major decision, it’s important to do your research ahead of time when choosing whether to lease or purchase a car to avoid costly mistakes down the road. Here are some important factors to consider when choosing whether to lease vs. buy a car. 

What’s My Budget?

Your budget should be a primary consideration when deciding whether to lease or buy a car. Remember to compare both the average monthly costs and the lifetime expense of buying vs. leasing a vehicle.

Ask yourself questions about the total cost of financing your purchase, including both your likely down payment plus monthly loan payment and maintenance expenses. Bear in mind that maintenance costs will rise as your vehicle gets older.

Compare this with your likely vehicle lease payments. What regular expenses will the dealership cover under a lease? Are scheduled oil changes covered as well as major milestone maintenance work and repairs? What about tires?

Leasing is usually more affordable than financing, but remember that money spent on a financed vehicle can be recouped if you continue to drive the vehicle for longer (especially after your loan is paid off), or if you choose to sell the vehicle. 

What’s My Average Monthly Mileage?

Did you know that how often and how far you drive can be a major consideration in your leasing or buying decision? While driving further will cost you more in fuel, understanding how mileage can play a role in the leasing terms of a vehicle can impact your decision. 

Leasing can be a good option if you generally only travel short distances within the greater RVA. However, most vehicle leases come with mileage limits. If you surpass these limits, you will need to pay a penalty when you return the car at the end of the lease.

You might also face charges if your car has more wear and tear than usual for a given mileage. So if your job requires a lot of driving or you just love to be out on the open highway, perhaps purchasing your next car is the better way to go.

How Long Will I Keep This Vehicle?

Consider how long you intend to keep driving the vehicle you have in mind. Do you like to keep up with the latest trends and newest models? Leasing might allow you to afford a higher-end vehicle than you would be able to finance. Plus you can turn it in at the end of the lease for an updated model.

Similarly, if you simply want a safe and reliable vehicle and do not want to have to worry too much about maintenance and upkeep, then leasing can help free you up from many of the everyday hassles of owning your own car.

Remember that while you will pay much less if you finance a car and pay it off over the same period that you might lease two more cars, you also face the risk of your loan going “upside down” if the value of your car falls below what you still need to pay off on your loan.

At the same time, if you end up really liking a car you leased, you might want to consider taking the option to buy your vehicle. You’ll likely need to arrange additional financing, but if car prices have risen, you could get a good deal. 

Most importantly, however, remember that at the end of a lease, you will give back your car with nothing to show for the money you have spent. However, at the end of your loan, you will own your car outright and can choose at your convenience whether to sell or just keep driving it!

Leasing Advantages and Disadvantages

Let’s take a look at some of the specific pros and cons of leasing a vehicle. Major advantages of choosing to lease rather than finance a car include:

  • Leasing costs less: Monthly payments are usually less on a comparable vehicle lease.
  • Drive a safe and reliable vehicle: You’ll always have a current model, fully featured car.
  • No expensive repairs: Regular maintenance is covered by your leasing agreement.
  • No loss of value: You have steady payments and no need to sell your car when your lease ends.
  • No need to sell: At the end of your lease, you simply return your car to the dealership or exercise your option to buy it.

At the same time, it’s important to be aware of some of the potential disadvantages of leasing your vehicle. These include:

  • You don’t keep the car: When your lease expires, you return your vehicle to the dealer.
  • Mileage and wear and tear penalties: Leases restrict how far you can drive a vehicle.
  • You never own your vehicle: The money you pay on a lease does not build ownership.
  • Early termination fees: You will need to pay a significant penalty to cancel a lease early.
  • More expensive over time: Leasing actually costs more over time than buying because you are always paying to use a new car when its value is falling the fastest.

Financing Advantages and Disadvantages

Choosing to finance a vehicle also comes with specific pros and cons. Some of the major advantages of choosing to finance rather than lease a vehicle include:

  • You pay less over time: It costs less to finance than to pay for back-to-back leases. 
  • You control maintenance expenses: Cut costs or invest more to extend your car’s life.
  • You can sell your vehicle: You have the option to sell your car to pay off your loan.
  • You make money if car prices rise: Fixed loan payments mean you will pay less.
  • You own your vehicle at the end of the loan: When you’ve paid off your loan, your vehicle is yours to sell, trade back in, or keep driving. 

That said, choosing to finance a vehicle rather than leasing also has some potential drawbacks. These include:

  • Higher monthly costs: You’ll pay more each month in financing and maintenance costs.
  • Less choice: You might have to settle for a more affordable model than if you leased.
  • You need to keep a vehicle longer: To earn the benefits of paying off your loan, you’ll keep the same car for many years. 
  • Interest adds up: On longer loans, you’ll pay far more in interest than your car is worth. 
  • Upside-down risk: If car prices fall sharply or you rack up a lot of miles on your vehicle, you may end up owing more on your loan than your car is worth, making it hard to sell.

The following table summarizes the differences between leasing and financing your vehicle.

Leasing Financing
Monthly Cost Lower Higher
Lifetime Cost Higher Lower
Interest/Money factor Usually fixed Usually fixed
Maintenance Included Additional
Mileage Limited Unlimited
Wear and Tear Limited Unlimited
Customization Not usually allowed Unlimited
Ownership No ownership Increases as the loan is paid
End of term Car is returned to dealer Ownership is transferred

When to Lease and When to Buy

Leasing or buying a vehicle comes with its own set of pros and cons. Which works best for you depends on your personal situation, preferences, and on how you intend to use your new car.

Vehicle leases tend to work best for people who expect their needs or circumstances to change within the next couple of years. If you see yourself in this situation, leasing the vehicle might be a better option.

Leasing can also be a good option if you are prepared to pay more over time to avoid the expense or hassle of maintenance while ensuring you are always driving a safe, reliable vehicle. Additionally, if it is important to you to have access to the latest model of your favorite car brand then leasing is a good route to take.

However, if you are happy to keep a car until it needs to be replaced, you want to be responsible for maintaining or even customizing your vehicle, or you want the freedom to sell your car at will, then opting to finance your vehicle is probably a good long-term option. 

And, if you intend to drive your vehicle regularly, adventure on long road trips, or make some extra income by providing a ride-sharing service, buying your car is probably a better fit than leasing.

Finally, it’s important to understand what happens when you have paid off your loan or your car lease expires. With a car you have financed, your loan payments go towards increasing your ownership stake in your vehicle. Once your loan is paid off the vehicle is yours.

With leasing, once you have come to the end of your contract you have no claim to the vehicle. To keep driving you must either choose a new vehicle and sign a new lease contract or exercise your right to purchase your leased vehicle.

Ready to Make Your Decision?

Choosing whether to lease or buy comes with a lot of factors that need to be considered. At Call Federal, we are here to support you with all your major financial decisions.

To better understand your options, visit Call Federal’s Money & Beyond Portal where you’ll find our course on Buying vs. Leasing. You can also contact our team of expert auto lending specialists at 804-274-1200 or stop by one of our convenient branch locations.

Ready to make your move? Click below to learn more about how a Call Federal auto loan can get you on the road faster.

Back to Financial Insights

Share this post

Related Content

June 13, 2017

To Cosign or Not to Cosign: It’s a Big Question

When I got the itch to buy my first new car, I asked my dad if he would …

Read More about To Cosign or Not to Cosign: It’s a Big Question

November 14, 2017

How To Win At Car Buying

According to a 2015 survey from, that’s how 99% of people have negative feelings about the way …

Read More about How To Win At Car Buying

May 23, 2018

The 5 Biggest Blunders When Shopping For A New Car

Buying a new car should be an exciting and happy process. But all too often, we see people …

Read More about The 5 Biggest Blunders When Shopping For A New Car