Should I buy or lease a car?

Question

Rich Dad · Accepted Answer

“The real question isn’t buy or lease — it’s why you’re tying money up in a depreciating hunk of metal at all.”
Let’s get blunt: a car is not an investment. It’s a liability that drops 15–25% in value the moment you drive it off the lot and often 50–60% within five years. So before choosing buy vs. lease, ask yourself: Is this car making you money or draining your future? If it’s just transportation, minimize the financial damage and redirect cash toward assets — rental property, index funds, a business, or even a side hustle generating 15–30% returns.
Now, between buying and leasing? If you’re paying cash for a reliable 3–5 year-old car that’s already taken the big depreciation hit, buy it and drive it into the ground. Example: A $20,000 used Toyota that lasts 10 years costs roughly $2,000/year before maintenance. Compare that to leasing at $400/month — that’s $4,800 per year forever, and you own nothing at the end. Ownership wins when you keep the car long term.
But here’s where I’ll shock you: leasing can make sense if you’re disciplined and strategic. If you’re a high-income professional who values image — say a realtor or consultant closing six-figure deals — a $600/month lease that helps you land $200,000 in contracts is marketing, not transportation. Or if you invest the difference between a large down payment and a low lease payment into something earning 12% annually, you could outpace the depreciation trap. Most people don’t do this — they just enjoy the shiny ride.
The biggest trap? Financing a brand-new $45,000 car over 72 months at 7% interest. That’s about $750/month. Over six years, you’ll pay roughly $54,000 for something worth maybe $15,000 at the end. That’s wealth leakage. That $750 invested monthly at 10% for 10 years becomes about $155,000. That’s the opportunity cost people ignore.
So here’s my rule: If you can’t buy it twice in cash without sweating, you’re upgrading your ego, not your life. Buy used, keep it long, or lease only if it directly increases income. And whatever you save? Funnel it into assets that spit out cash.
A car should carry you to your wealth — not run it over.

Poor Dad · Answer

“Before you think about horsepower, think about your household budget.”
A car is one of the largest recurring expenses most families face, right after housing. The choice between buying and leasing should come down to predictability, long-term cost, and financial stability. In general, buying is safer and more economical over time — especially if you keep the vehicle for 8–10 years.
When you buy a car — ideally with a substantial down payment — you’re building equity in an asset you eventually own outright. For example, if you purchase a $25,000 vehicle with a 5-year loan at 6% interest, your payment may be around $483 per month. After five years, the car is yours. If you drive it another five years payment-free, your average monthly cost over 10 years drops dramatically. Leasing, on the other hand, often means paying $350–$500 per month continuously with mileage limits and wear-and-tear penalties.
Leasing can appear attractive because of lower monthly payments and fewer repair worries, since most leases last 2–3 years and remain under warranty. However, there are restrictions. Go over 12,000 miles per year, and you might pay $0.15–$0.30 per extra mile. Small scratches or interior wear can result in additional charges. Over 9 years of continuous leasing, you could easily spend $40,000–$50,000 without owning anything.
You must also consider job stability. If your income fluctuates or your industry is uncertain, committing to ongoing lease payments may create stress. During economic downturns — like in 2008 or 2020 — many people struggled with fixed obligations. Owning a paid-off car provides security. No lender can repossess a vehicle you fully own if times get tough.
I recommend buying a reliable, fuel-efficient model — perhaps 2–3 years old — and keeping it well maintained. Brands known for longevity, such as Toyota or Honda, often last 200,000 miles or more with proper care. Avoid long loan terms beyond 60 months if possible, as they increase interest costs and can leave you “upside down.”
In summary, leasing offers convenience, but buying offers stability and long-term savings. Choose the path that protects your budget, supports your retirement contributions, and minimizes financial risk.
Own your car outright, and you’ll sleep better at night.

Should I buy or lease a car?

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