In 2025, leasing often offers better short-term value due to high interest rates and fewer incentives, providing lower monthly payments for tech-focused drivers, while buying remains superior for long-term ownership, high mileage drivers, or those wanting equity, with the best choice depending on your budget, driving habits, and desire for new tech vs. saving money long-term.
Leasing is honestly the way to go on any EV, even a 2025 or 2026. Depreciation is huge these days on any EV, and your lease payments will likely end up being a fraction of the depreciation. Plus you get the $7500 credit unavailable to purchased Ioniq 5s. I've never leased until my EV6 GT and I am so glad I did.
The 90% rule in leasing is an accounting guideline for classifying leases, stating that if the present value (PV) of a lessee's minimum lease payments equals or exceeds 90% of the leased asset's fair market value (FMV), the lease should be treated as a finance lease (or capital lease) rather than an operating lease, reflecting essentially a purchase for accounting purposes. This rule helps determine if the lease transfers substantially all the risks and rewards of ownership, requiring balance sheet recognition of the asset and liability.
The Federal Reserve has implemented three rate cuts through the end of 2025, which will gradually influence interest rates for auto loans and other consumer debt. Because these changes take time to reach borrowers, lower auto loan rates may start to appear in early 2026.
The "1% lease rule" is a guideline in both real estate (rental income should be 1% of property cost) and auto leasing (monthly payment ideally under 1% of MSRP), used for quickly assessing potential deals, though it's a simplified benchmark that doesn't account for all expenses or market variations. In car leasing, a $40,000 car should ideally lease for around $400/month (before tax), while for real estate, a $200,000 home should aim for $2,000/month in rent.
A "good" lease length depends on your needs: 1-year is standard for apartments (balancing stability and flexibility), while 2-3 years offers more stability, lower risk of annual rent hikes, and sometimes better deals, especially for cars where 36 months spreads fees well. For long-term property (like buying), a lease of 90+ years is ideal, as shorter leases (under 80 years) can devalue the property and make mortgages difficult.
For most situations, if the lease term exceeds 75% of the remaining economic life of an asset and the asset still has at least 25% of its original useful life left, then the lease is considered a finance lease.
They Think Long Term. The average car on the road today is over 12 years old, meaning people keep vehicles longer than ever. Wealthy people factor this into their decision-making. If you're planning to keep a car for more than six years, buying almost always makes more financial sense.
The lease payment for a $45,000 car typically ranges from $300 to $500 per month, depending on factors like the down payment, lease term, residual value, and interest rate.
Top 10 Reasons Not to Lease a Car
Should I Buy My Leased Car? If your lease purchase option price is lower than the car's market value, it's usually a smart move. Used car values have yet to return to pre-pandemic levels, and although inventory rose slightly at the end of 2025, supply is expected to remain tight into 2026.
The main disadvantage of leasing a vehicle is that you never own it, meaning you build no equity and have no asset at the end of the term, essentially paying for a long-term rental with potential extra costs like mileage overages, wear-and-tear fees, and early termination penalties, leading to continuous payments if you keep leasing.
Whether buying a new car in 2025 is "worth it" depends on your priorities, as market conditions offer both benefits (better incentives, lower used car prices) and drawbacks (high overall prices, looming tariffs impacting future costs), with many experts seeing late 2025 as a good time for deals due to increased inventory and competition, especially with potentially lower interest rates and end-of-year sales, though high prices remain a challenge.
2-3 year lease
Typically your warranty will last the entire period of your ownership, so you do not need to worry about expensive repairs. You will also find decent monthly payments by choosing 24-36 months. Choosing the 36 month lease will give you a better interest rate though.
At the end of a lease (especially a car lease), you typically have options: return the vehicle (paying potential fees for excess wear/mileage), buy the vehicle for the predetermined residual value, lease/buy a new vehicle, or sometimes extend the lease for a short period, with preparation starting months in advance to avoid surprise costs like disposition fees and wear-and-tear charges. For property, ownership reverts to the freeholder unless arrangements are made, while tenants may become month-to-month renters if the landlord accepts rent, or face eviction if not.
Longer terms of 48 months or more can offer attractively low monthly payments but may incur higher total ownership costs due to extended maintenance responsibilities and potential repair needs beyond warranty coverage.
Let's look at some things to keep under your hat while you explore the lot.