Take it from someone with nearly fifteen years in the business who has written up literally thousands of new car deals. If you drive lots of miles, if you like to keep your car for years and years, and if you hate making payments: leasing is almost always your best option.
For most people, the car they drive represents their second-biggest real asset after their home. In 2026, with fewer people than ever owning their home, their car might be their biggest real asset. As a typically depreciating asset, that’s a problem – especially in a used-car market that’s been hit by shock after shock: tariffs, disappearing rebates, rapid technological change, literal acts of Congress, and the occasional high-profile CEO throwing out a “Roman salute” on TV and tanking resale values.
Whether it’s a small business, a stock portfolio, or an old shoe box stuffed with Honus Wagners, when something nutty happens and the bottom drops out of your biggest asset, you need to have a calculated exit strategy in place. When it comes to your car, leasing is that calculated exit strategy.
Get out, or don’t
Except for a few highly publicized edge cases — like when Tesla briefly removed residual buyouts from their lease contracts in 2022 — a lease sets a purchase price at the end of the term called a residual value, or simply the “residual.” That residual is subtracted from the vehicle’s negotiated selling price, and the difference is what you’re actually paying for: the portion of the car you use during the lease.
That cost is spread over a defined term, usually defined by time and miles (ex.: three years and 30,000 miles), and it’s the core reason leases work the way they do. You’re just responsible for the depreciation, with a clearly defined agreed value at the end of the term.
To keep the math simple, let’s say you have a $50,000 car (just under the average transaction price for a new vehicle, as I type this) that the leasing company is willing to pay $30,000 for in three years, assuming it has less than 30,000 miles on it and is in otherwise serviceable condition. $50-30K = $20,000. Divided by 36 months, you get approx. $555/mo. plus taxes, fees, and any rate on the money.
Here’s where it gets interesting:
- YOU WIN: if the market shifted against you in the intervening years, and the vehicle is only worth $25,000 instead of $30,000, you can walk away from it. That $5,000 negative equity becomes the leasing company’s problem.
- YOU WIN: if the market has gone your way in those three years and the vehicle is worth more, say $35,000 instead of the projected $30,000, you can still buy the car for the previously agreed residual, immediately scoring $5,000 in equity or flipping it to pocket the cash.
- YOU WIN: if the residual calculation was spot-on. You got what you paid for at the agreed upon price, which is a rare enough thing these days to count as a win in my book.
Right about now, you’re probably wondering why I’m pushing leases when they get such a bad rap in the world at large. “Why would you present a win, win, win scenario,” you might ask, “when my cousin leased a car a few years ago and got hit with thousands of dollars in extra fees for going over the miles?”
Your cousin’s not alone. Lots of people make bad decisions when it comes to leasing, and whether they want to hear this or not: those particular injuries were probably self-inflicted.
Bad customers get bad deals
You’ll hear people say that you shouldn’t lease a vehicle if you don’t like making payments, want to avoid debt, like to keep your cars for a long time, or drive too many miles to lease. I’m going to throw a wrench into their arguments early and tell you that, in my opinion, those are all great reasons to lease your next ride.
- I DON’T LIKE MAKING PAYMENTS – Great! Leases aren’t one size fits all solutions and you don’t have to accept the advertised deal. If you like writing a check for your vehicle, a single payment lease could be a great option. In that structure, you still have a selling price, an agreed upon future value (typically defined in terms of time and miles), and a responsibility to pay the difference. The difference is that, in this scenario, you write a check for the total depreciation on day one, which can save you interest even as it gives you that calculated exit at the end of the term. When that happens, you have options: you can choose to write another check, finance the balance, or walk away altogether.
- I WANT TO AVOID DEBT – Great! Leases can sometimes be structured with an ultra-low residual value (sometimes as low as $1), letting you buy out the vehicle at the end while still taking advantage of lease incentives, state and local tax credits, and other perks that would be unavailable through traditional financing or check-writing.
- I LIKE TO KEEP MY CARS A LONG TIME – Great! Keeping your car longer is easily the most sustainable new car option, minimizing the sunk carbon cost of manufacturing the vehicle. The problem is that, on a long enough timeline, the probability of experiencing a serious mechanical issue or traffic accident reaches 100%. If that happens within the first few years of ownership, you might have concerns about the car on long trips or even trouble selling it with a bad CarFax. Giving yourself a pre-planned moment of reflection three or four or even five years into the life of the vehicle gives you the option to keep going with it, or get out – and that reduced resale value? Most of the time, that negative hit to the residual becomes the finance company’s problem.
- I DRIVE TOO MANY MILES TO LEASE – No, you drive too many miles not to lease. If you’re putting fifty- or sixty-thousand miles per year on your car, having an agreed-upon residual value is an absolute must. Yes, adding miles to the lease will reduce the residual value and increase that delta between the selling price and the vehicle’s future value that you’re effectively paying for, but the same would be true if you financed the vehicle or bought it outright. The difference is that you have lined up, in advance, a buyer willing to pay “x” amount for the car two or three years from now. If you get to that point and the car is worth more than the residual, you win. If it’s worth less than the residual, you win.
If you haven’t picked up on the theme here yet, it’s my sincere opinion that in almost every scenario, leasing a vehicle gives you options. And when you have options, you win.
Where people tend to get in trouble is that leasing might give them too many choices. Bad choices like choosing to agree to a residual value that’s based on significantly fewer miles than they actually drive, or choosing to drive home in a vehicle they can’t afford because an advertised lease deal showed a payment they were comfortable with and they chose not to ask any relevant questions. And, yes – unscrupulous dealers have been known to present highly conditional leases as “the only way” to get customers to the payment they want on the vehicle they want and make whatever problems may occur problems for someone else in the future.
All of those are very real, very genuine issues – but if you’re smart, read the fine print, and can stick to the terms of the lease contract, leasing is absolutely the way to go. To that end, here are some of the best EV lease deals currently going:
Electrek’s Take Disclaimer
Car deals, lease structures, tax treatment, vehicle incentives, credit ratings, and financing terms are messy, high-stakes, and highly situational – often varying not just from state to state and car to car, but city to city and from individual to individual. Federal incentives, local rebates, manufacturer programs, dealer discounts, money factors, and the fine print in lease contracts can overlap, stack, or cancel each other out.
That complexity is exactly why the smart people you know rely on accountants, tax professionals, and work with trusted finance managers to help them make sense of what’s being offered – you should absolutely do the same.
If you remain unconvinced, that’s OK, too. I gotchu:
Original content from Electrek; story image by RedLineStylingLLC.
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