Buying vs. Leasing in 2026. The Math Has Changed.

Buying vs. Leasing in 2026. The Math Has Changed.

Humphrey Yang's latest video tackles one of the most debated questions in car ownership: should you buy or lease? His answer might surprise you. It depends on the math, and the math looks different than it did a few years ago.

Our Take

The conventional wisdom has always been "buying is smarter." And over the long run, it still is. You own the asset. But the gap between buying and leasing has narrowed significantly in 2026, and for certain situations, leasing has become genuinely competitive. The problem is that most people don't actually run the numbers. They go with gut feeling or whatever the finance manager steers them toward. That's how you end up overpaying either way.

The Questions That Matter

1. Is buying still cheaper than leasing?

Over 6 years, yes. When you compare the total cost of buying and owning a car for 6 years against two back-to-back 3-year leases, buying comes out ahead. You own the car outright at the end, which means no payments and an asset you can sell or trade.

But here's where it gets interesting. Over a 3-year window, the picture flips depending on the vehicle. Yang's analysis shows buying can save about $5,445 over 3 years in some scenarios, but in others, leasing is actually cheaper by roughly $2,900. That's a meaningful difference that didn't exist when interest rates were near zero and residual values were inflated.

The takeaway? If you keep cars for 5+ years, buying almost always wins. If you swap every 3 years, you need to run vehicle-specific numbers.

2. What makes a lease good or bad in today's market?

Yang highlights a rule of thumb that's worth memorizing: if the lease-end residual value is less than 50% of the MSRP, it's usually not a good deal. That means the leasing company is betting the car will depreciate heavily, and they're passing that cost to you through higher monthly payments.

Cars that hold their value well, like Toyota and Lexus models, tend to have better lease terms because the residual is higher. Cars with steep depreciation, like some luxury European brands, can have lease payments that are barely lower than loan payments, defeating the whole purpose.

The other factor is the money factor (essentially the interest rate on a lease). With rates elevated in 2026, some lease deals that look affordable monthly are actually expensive when you calculate the total cost including the down payment, fees, and taxes.

3. What about the hidden costs people miss?

Leasing has costs that don't show up in the monthly payment comparison:

Mileage limits. Most leases cap you at 10,000 to 12,000 miles per year. Go over and you're paying 15 to 25 cents per mile at turn-in. If you drive 15,000+ miles annually, leasing is almost never worth it.

Wear and tear charges. That door ding or stained seat? The leasing company will charge you at return. Owning means normal wear is your problem to fix or ignore.

No equity. At the end of a lease, you have nothing. At the end of a loan, you have a car. Even if it's depreciated, a paid-off car with no monthly payment is one of the best financial positions you can be in.

Gap insurance. If your leased car is totaled, you could owe more than the insurance payout. Some leases include gap coverage, others don't. Check before you sign.

4. When does leasing actually make sense?

Leasing makes financial sense in a narrow set of circumstances: you want a new car every 3 years, you drive under 12,000 miles per year, the residual value is above 50% of MSRP, and you can get a competitive money factor. If all four of those are true, leasing can be the smarter move.

It also makes sense if you're using the car for business and can deduct lease payments, which changes the after-tax math significantly.

For everyone else, buying a 1 to 3 year old certified pre-owned vehicle and keeping it for 5+ years remains the most cost-effective approach to car ownership. You skip the steepest depreciation and still get warranty coverage.

What You Should Actually Do

Don't trust the monthly payment. Calculate the total cost over your expected ownership period for both options, including down payment, monthly payments, fees, insurance, maintenance, and the value of the car at the end. Yang is right that you need to run the numbers yourself. The "right" answer depends entirely on the specific car, your driving habits, and how long you plan to keep it.