When it comes to getting a new car, you’ll usually have the option of buying the car outright or leasing it from a dealer. But which of these options gives you the best value for money over time, and what are the main differences between the two?
This analysis looks into the costs involved with buying and leasing some of the most popular car models in the U.S. and how they compare to each other.
When you buy a car, you own it outright either by paying for it in full straight away or financing it and paying it off over time. Once you’ve paid for it, the car is yours to do with as you please.
When you lease a car, you are signing a lease agreement with the captive finance or a lender for an agreed length of time. When the lease period ends, you have the option of buying the car or returning it to the dealer. If you choose to return the car to the dealer, you can then start the process again with a new lease on a new car.
Let’s look at some of the key features and differences between leasing and buying a car.
| Features | Leasing | Buying |
|---|---|---|
| You own the car | ❌ | ✅ |
| Low upfront payment | ✅ | ❌ |
| New car every few years | ✅ | ❌ |
| No restrictions on mileage | ❌ | ✅ |
| No restrictions on modification | ❌ | ✅ |
| You have the option to sell the car | ❌ | ✅ |
| No worries about depreciation | ✅ | ❌ |
The analysis below shows the top 10 most popular car models in the U.S. [1] Top 10 Most Popular Cars in the U.S. 2023 - Car and Driver https://www.caranddriver.com/news/g43553191/bestselling-cars-2023/ and their average retail prices, as well as annual running costs like gas, maintenance, and insurance.
The table below shows the retail price and running costs of the top 10 cars analyzed in this study.
The GMC Sierra has the highest retail starting price at $66,998, while the Toyota Camry is the cheapest at $33,808. The average retail starting price across all of the most popular cars is $49,197.
The Tesla Model Y is the most expensive to insure at an average of $2,399 per year, while the Toyota Camry is the cheapest at $1,565 per year. For gas, the GMC Sierra 1500 costs the most per year at $3,005 per year based on 10,000 miles, while the Nissan Rogue is the cheapest at $1,226 per year (excluding the Tesla Model Y which costs $453 per year to charge).
| Car model | Retail starting price | Annual gas | Annual insurance | Annual fees & taxes |
|---|---|---|---|---|
| Car model GMC Sierra | Retail starting price $66,998 | Annual gas $3,005 | Annual insurance $1,817 | Annual fees & taxes $1,323 |
| Car model Ram Pickup | Retail starting price $61,075 | Annual gas $2,092 | Annual insurance $1,834 | Annual fees & taxes $1,006 |
| Car model Chevy Silverado | Retail starting price $58,310 | Annual gas $2,375 | Annual insurance $1,653 | Annual fees & taxes $1,156 |
| Car model Jeep Grand Cherokee | Retail starting price $57,030 | Annual gas $1,689 | Annual insurance $1,901 | Annual fees & taxes $988 |
| Car model Ford F-Series | Retail starting price $51,760 | Annual gas $1,900 | Annual insurance $1,664 | Annual fees & taxes $1,069 |
| Car model Tesla Model Y | Retail starting price $44,630 | Annual gas $440* | Annual insurance $2,399 | Annual fees & taxes $956 |
| Car model Toyota RAV4 | Retail starting price $43,678 | Annual gas $1,310 | Annual insurance $1,766 | Annual fees & taxes $819 |
| Car model Honda CR-V | Retail starting price $37,850 | Annual gas $1,288 | Annual insurance $1,699 | Annual fees & taxes $713 |
| Car model Nissan Rogue | Retail starting price $36,830 | Annual gas $1,226 | Annual insurance $1,832 | Annual fees & taxes $773 |
| Car model Toyota Camry | Retail starting price $33,808 | Annual gas $1,288 | Annual insurance $1,565 | Annual fees & taxes $639 |
| Average | Retail starting price $49,197 | Annual gas $1,661 | Annual insurance $1,813 | Annual fees & taxes $944 |
*Tesla Model Y gas price is the electricity charge price
Let’s break down the costs you’ll typically incur when you buy a car either outright or with a finance plan.
When you buy a car on finance, the monthly payment is typically made up of a payment towards the principal balance of your loan, and an interest payment that you incur on top. The amount of interest you pay will depend on a number of factors including your credit score and how much down payment you put down for the car.
The most expensive car, the GMC Sierra, would cost $1,805 per month on finance over a 36-month period, while the cheapest car, the Toyota Camry has a monthly cost of $911 over a 36-month finance plan.
| Car model | Total monthly financecost (inc. interest) |
|---|---|
| GMC Sierra | $1,805 |
| Ram Pickup | $1,645 |
| Chevy Silverado | $1,571 |
| Jeep Grand Cherokee | $1,536 |
| Ford F-Series | $1,394 |
| Tesla Model Y | $1,202 |
| Toyota RAV4 | $1,177 |
| Honda CR-V | $1,020 |
| Nissan Rogue | $992 |
| Toyota Camry | $911 |
| Average | $1,325 |
Note: This analysis is based on someone with a Good credit score (670-739 FICO® Score) paying the average down payment of 20% for each car.
Sources [3] How Much Will My Vehicle Payments Be? - MyFICO https://www.myfico.com/credit-education/financial-calculators/vehicle-payments [5] How Much is the Typical Car Down Payment? - Kelley Blue Book https://www.kbb.com/car-advice/what-is-the-best-down-payment/#:~:text=Exact%20down%20payment%20amounts%20will,secure%20more%20favorable%20financing%20offers
The cost of buying a car outright in full is of course going to be cheaper than buying the same car on finance as you’ll pay interest when you take out a finance plan. The costs for things like gas, maintenance, and insurance will remain the same in both scenarios. Let’s take a look at the difference in price for each of the top 10 cars when you buy them outright compared to on finance, and run them for three years.
Across the top 10 most popular car models, the average cost to buy a car outright in full and run it for three years is $62,453. The average cost to purchase a car on finance and run it for three years is $70,807.
The most expensive car to buy and run over three years is the GMC Sierra at a total cost of $85,434 when buying outright, or $96,804 when buying on finance. The cheapest car to buy and run for three years is the Toyota Camry which would cost $44,286 to buy in full, and $50,023 on finance, including the associated running costs.
The average price difference between buying outright and on finance across all of the cars is $8,354, with the GMC Sierra having the biggest difference ($11,370).
| Car model | Total cost for a new car over 36 months (buying the car outright in full) | Total cost for a new car over 36 months (on finance with good credit & APR of 12.95%) | Difference between buying outright and financing over 36 months |
|---|---|---|---|
| Car model GMC Sierra | Total cost for a new car over 36 months (buying the car outright in full) $85,434 | Total cost for a new car over 36 months (on finance with good credit & APR of 12.95%) $96,804 | Difference between buying outright and financing over 36 months $11,370 |
| Car model Ram Pickup | Total cost for a new car over 36 months (buying the car outright in full) $75,869 | Total cost for a new car over 36 months (on finance with good credit & APR of 12.95%) $86,241 | Difference between buying outright and financing over 36 months $10,372 |
| Car model Chevy Silverado | Total cost for a new car over 36 months (buying the car outright in full) $73,862 | Total cost for a new car over 36 months (on finance with good credit & APR of 12.95%) $83,770 | Difference between buying outright and financing over 36 months $9,908 |
| Car model Jeep Grand Cherokee | Total cost for a new car over 36 months (buying the car outright in full) $70,764 | Total cost for a new car over 36 months (on finance with good credit & APR of 12.95%) $80,448 | Difference between buying outright and financing over 36 months $9,684 |
| Car model Ford F-Series | Total cost for a new car over 36 months (buying the car outright in full) $65,659 | Total cost for a new car over 36 months (on finance with good credit & APR of 12.95%) $74,447 | Difference between buying outright and financing over 36 months $8,788 |
| Car model Tesla Model Y | Total cost for a new car over 36 months (buying the car outright in full) $56,016 | Total cost for a new car over 36 months (on finance with good credit & APR of 12.95%) $63,596 | Difference between buying outright and financing over 36 months $7,580 |
| Car model Toyota RAV4 | Total cost for a new car over 36 months (buying the car outright in full) $55,364 | Total cost for a new car over 36 months (on finance with good credit & APR of 12.95%) $62,782 | Difference between buying outright and financing over 36 months $7,418 |
| Car model Honda CR-V | Total cost for a new car over 36 months (buying the car outright in full) $48,949 | Total cost for a new car over 36 months (on finance with good credit & APR of 12.95%) $55,389 | Difference between buying outright and financing over 36 months $6,440 |
| Car model Nissan Rogue | Total cost for a new car over 36 months (buying the car outright in full) $48,322 | Total cost for a new car over 36 months (on finance with good credit & APR of 12.95%) $54,570 | Difference between buying outright and financing over 36 months $6,248 |
| Car model Toyota Camry | Total cost for a new car over 36 months (buying the car outright in full) $44,286 | Total cost for a new car over 36 months (on finance with good credit & APR of 12.95%) $50,023 | Difference between buying outright and financing over 36 months $5,738 |
| Average | Total cost for a new car over 36 months (buying the car outright in full) $62,453 | Total cost for a new car over 36 months (on finance with good credit & APR of 12.95%) $70,807 | Difference between buying outright and financing over 36 months $8,354 |
Note: Includes the costs of insurance, fees, and gas/electric charges. Maintenance costs are not included as these are often covered under warranty for new cars.
Now if you were to lease the same car over the same period, let’s delve into the differences in cost compared to buying.
The table below shows the monthly cost of leasing each of the cars, including taxes and fees, with good credit (670-739 FICO® Score). Across all of the cars, the average monthly lease cost is $662. The GMC Sierra is the most expensive car to lease with a cost of $907 per month, and the Honda CR-V has the cheapest monthly lease cost at $477.
| Car model | Monthly lease cost with good credit |
|---|---|
| GMC Sierra | $907 |
| Ram Pickup | $825 |
| Chevy Silverado | $743 |
| Jeep Grand Cherokee | $727 |
| Ford F-Series | $674 |
| Tesla Model Y | $636 |
| Toyota RAV4 | $623 |
| Toyota Camry | $527 |
| Nissan Rogue | $483 |
| Honda CR-V | $477 |
| Average | $662 |
Across all of the cars, the average total of the lease and running costs over 36 months is $37,448, based on a person with a good credit score. The GMC Sierra would cost a total of $51,151 to lease
| Car model | 36-month lease cost with good credit |
|---|---|
| GMC Sierra | $51,151 |
| Ram Pickup | $45,041 |
| Chevy Silverado | $42,325 |
| Jeep Grand Cherokee | $40,218 |
| Ford F-Series | $38,125 |
| Tesla Model Y | $34,905 |
| Toyota RAV4 | $34,680 |
| Toyota Camry | $30,268 |
| Nissan Rogue | $29,189 |
| Honda CR-V | $28,581 |
| Average | $37,448 |
Note: Includes the costs of insurance, fees, and gas/electric charges. Maintenance costs are not included as these are often covered under warranty for new cars.
So how does the cost of a new lease every three years stack up against buying a new car over three years?
Comparing the costs of the two monthly plans, one to buy the car on a three-year finance plan, and one to lease the car on a three-year lease plan, you can see the difference. These costs also include insurance, gas, and any additional fees.
For all of the top 10 cars analyzed, it is cheaper to lease over three years than buy on finance. The biggest price difference between buying and leasing was for the GMC Sierra which costs $45,653 more to buy on finance than lease. The smallest difference was for the Toyota Camry which is $19,755 more expensive when financed over three years compared to leased.
| Car Model | Total cost for a new car on finance over 36 months (good credit) | Total cost of a new car on lease over 36 months(good credit) | Price difference | Cheapest option over three years |
|---|---|---|---|---|
| Car Model GMC Sierra | Total cost for a new car on finance over 36 months (good credit) $96,804 | Total cost of a new car on lease over 36 months(good credit) $51,151 | Price difference $45,653 | Cheapest option over three years Lease |
| Car Model Chevy Silverado | Total cost for a new car on finance over 36 months (good credit) $83,770 | Total cost of a new car on lease over 36 months(good credit) $42,325 | Price difference $41,445 | Cheapest option over three years Lease |
| Car Model Ram Pickup | Total cost for a new car on finance over 36 months (good credit) $86,241 | Total cost of a new car on lease over 36 months(good credit) $45,041 | Price difference $41,200 | Cheapest option over three years Lease |
| Car Model Jeep Grand Cherokee | Total cost for a new car on finance over 36 months (good credit) $80,448 | Total cost of a new car on lease over 36 months(good credit) $40,218 | Price difference $40,230 | Cheapest option over three years Lease |
| Car Model Ford F-Series | Total cost for a new car on finance over 36 months (good credit) $74,447 | Total cost of a new car on lease over 36 months(good credit) $38,125 | Price difference $36,322 | Cheapest option over three years Lease |
| Car Model Tesla Model Y | Total cost for a new car on finance over 36 months (good credit) $63,596 | Total cost of a new car on lease over 36 months(good credit) $34,905 | Price difference $28,691 | Cheapest option over three years Lease |
| Car Model Toyota RAV4 | Total cost for a new car on finance over 36 months (good credit) $62,782 | Total cost of a new car on lease over 36 months(good credit) $34,680 | Price difference $28,102 | Cheapest option over three years Lease |
| Car Model Honda CR-V | Total cost for a new car on finance over 36 months (good credit) $55,389 | Total cost of a new car on lease over 36 months(good credit) $28,581 | Price difference $26,808 | Cheapest option over three years Lease |
| Car Model Nissan Rogue | Total cost for a new car on finance over 36 months (good credit) $54,570 | Total cost of a new car on lease over 36 months(good credit) $29,189 | Price difference $25,381 | Cheapest option over three years Lease |
| Car Model Toyota Camry | Total cost for a new car on finance over 36 months (good credit) $50,023 | Total cost of a new car on lease over 36 months(good credit) $30,268 | Price difference $19,755 | Cheapest option over three years Lease |
| Average | Total cost for a new car on finance over 36 months (good credit) $70,807 | Total cost of a new car on lease over 36 months(good credit) $37,448 | Price difference $33,359 | Cheapest option over three years - |
While this research shows that over a three-year period, leasing is the cheaper option for all of the top 10 cars, there are some other factors to consider when your lease or finance plan ends.
If you buy a car with a finance plan, at the end of the finance period, you’ll own the car and can choose to keep it or sell it. If you keep it, you’ll no longer be paying the monthly finance payment and you’ll only have to pay for things like fuel, insurance, and maintenance. Alternatively, you could sell it and put the money towards a new car.
In this study, a 20% down payment has been assumed for each car as this is the most common downpayment on a car loan. [5] How Much is the Typical Car Down Payment? - Kelley Blue Book https://www.kbb.com/car-advice/what-is-the-best-down-payment/#:~:text=Exact%20down%20payment%20amounts%20will,secure%20more%20favorable%20financing%20offers If you’re buying a car on finance, this is something you’ll need to consider, especially if you’ll need to save up for your down payment. Typically, the higher the down payment to put in at the start, the lower your monthly costs, and vice versa.
With a lease, you have a few options at the end of the agreement. You could choose to buy the car at the end, and the amount you pay will be the estimated residual value which is projected by the leasing company at the beginning of your lease agreement.
In some instances, this buyout price might be higher than the vehicle is actually worth, meaning you won’t be getting a very good deal. However, if you have the cash, and the car’s market value is more than the lease’s residual value, it may be a good idea to buy it out and then sell the car yourself.
It’s important to know that buying out a lease can often be more expensive than buying a car with a traditional loan. So if you think you’ll want to own the car over a longer period, buying with a finance loan might be better suited to you.
Another option after a lease ends is trading in the vehicle and beginning a new lease on a different car. This is something to consider if you don’t have enough cash saved up to buy the car at the end of your existing lease, and you’re happy to carry on with monthly payments on another new vehicle.
Both leasing and buying cars have their benefits depending on what you want out of a car and your financial position. However, not everyone has the money to buy outright or put down a large downpayment to buy a car, so leasing can be a good alternative in this situation.
Let’s take a look at some of the pros and cons of leasing and buying when it comes to cars. [7] Pros and Cons of Leasing a Car - Chase https://www.chase.com/personal/auto/education/leasing/pros-and-cons-of-leasing-a-car
If you want to buy or lease a car, your credit score can have an effect on the type of plan or interest rate you’ll be accepted for. Usually, if you’re buying the car in full, your credit score won’t matter, but if you want to buy it on finance or take out a lease, it will make a difference.
As we’ve mentioned already, the monthly cost of a finance plan or lease can vary depending on whether your credit score is good or bad. As you’re borrowing money from the lender to pay back over time, if your credit score is bad you’ll typically have to pay more interest, and if it’s good you’ll pay less interest.
It’s always worth checking your credit score before applying for a finance plan or lease so you’ll have an idea of what you might have to pay in interest.
The calculations in this analysis are for a 36-month period of financing or leasing a car while driving 10,000 miles annually in the state of Texas. Most car leases or finance deals offer the option of a 24, 36 or 48-month period, so this study analyzed 36 months as a midpoint.
The total cost to buy a new model of each car and keep it for 36 months was calculated by adding up the cost of buying the car outright or on finance (with a 20% downpayment) using Carmax’s Car Payment Calculator and FICO’s Vehicle Payment Calculator. The average annual insurance, gas/electricity, and associated fees were collected from AAA and added to the total.
The total cost of leasing a model of each car on a new 36-month lease was calculated by adding up the monthly lease costs using the Edmunds Car Lease Calculator, plus the average annual insurance, gas, and associated fees from AAA.
All information is correct as of May 2024 but prices are subject to change.
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