Disclaimer: This site is an independent editorial resource providing general information and estimates about new-car buy vs. lease financial decisions. It is not financial, tax, or legal advice. Tax treatment of business vehicle expenses, EV credits, and loan-interest deductions under the One Big Beautiful Bill Act (OBBBA) varies by individual circumstance - consult a licensed tax professional before relying on any figures for a filing decision. Calculator outputs are estimates based on the inputs provided and current market conventions; actual dealer quotes, APRs, money factors, residuals, and residual buyout prices may vary. This site is not affiliated with any manufacturer, captive finance arm, bank, insurance company, or extended warranty provider. All trademarks are property of their respective owners. Tax rules, APR tiers, and lease terms change frequently. Data verified April 2026. Confirm specifics with your lender, dealer, or CPA.

Lease Term Analysis / April 2026

60-Month Buy vs Two 30-Month Leases

The cleanest apples-to-apples comparison between buying and leasing over a fixed 5-year window is the 60-month finance versus two consecutive 30-month leases. Both paths cover the same 60-month period, both deliver continuous vehicle access, both end with the buyer or lessee facing a transition decision (sell the paid-off vehicle, take out another lease, etc.). The math comparison reveals the structural reason buying wins on net cost over this horizon: every monthly loan payment builds equity, while every monthly lease payment is consumed. This guide walks through the canonical comparison on a mainstream $35,000 vehicle, the cash-flow trade-off, the warranty consideration, and the refi optionality that makes the buy path even more attractive for buyers expecting credit improvement.

The structural comparison: equity vs consumption

A 60-month auto loan amortizes principal across 60 monthly payments. Each payment includes a principal portion (the amount that reduces the loan balance and accrues to the buyer's equity) and an interest portion (the amount that flows to the lender as cost of capital). The amortization schedule front-loads interest in the early months and back-loads principal; by the midpoint of the loan, the principal portion of each payment exceeds the interest portion. At month 60, the loan is fully paid and the buyer owns the vehicle outright.

Two consecutive 30-month leases consist of 60 monthly payments, each comprising a depreciation portion (the amount that compensates the lessor for the vehicle's value decline during that month, flowing to the lessor) and a rent charge portion (the lessor's yield on the still-residual amount, also flowing to the lessor). At the end of each 30-month cycle, the lessee returns the vehicle (or buys it at residual, but typically returns). At month 60, the lessee has made 60 lease payments and holds no vehicle.

The structural difference is that loan principal accrues to the buyer's equity over time while lease depreciation accrues to the lessor as recovery of capital. Over 60 months, the buyer's equity position is roughly $14,000 to $20,000 on a mainstream vehicle (the fully-paid-off residual value); the lessee's equity position is $0. This $14,000-to-$20,000 gap is the buy-path advantage, partially offset by the higher monthly cash flow during the active loan term.

Worked example: 2026 Subaru Outback Premium

MSRP $34,800, negotiated price $33,500. Personal-use buyer with prime credit (FICO 730), 12,000 mi/yr expected driving.

60-month finance. $4,500 down, financed $29,000 at 6.89 percent APR. Monthly payment $573. Total 60 payments = $34,380. Plus down payment $4,500. Total cash out: $38,880. Interest paid: $5,380. Vehicle at month 60 with 60,000 miles, market value roughly $15,700 (45 percent of MSRP, Subaru holds value reasonably well). Net 5-year cost: $23,180.

Two consecutive 30-month leases. Each cycle at 12,000 mi/yr, money factor 0.00175, residual at 30 months around 62 percent of MSRP = $21,576. Depreciation amount $11,924 per cycle, amortized over 30 months = $397 plus rent charge of $77 = $474 base monthly. With 6.5 percent state sales tax: $505 monthly. Acquisition fee $725 per cycle. First month plus tax due at signing per cycle: roughly $1,500 drive-off. 29 additional monthly payments per cycle at $505 = $14,645 per cycle. Disposition fee $475 per cycle (waived on cycle 2 if same captive). Total per cycle: roughly $16,800. Two cycles: $33,600 in lease payments plus $1,000 in fees (one disposition waived on loyalty) = $34,600 cash out with $0 asset. Net 5-year cost: $34,600.

Net comparison. Buy net cost $23,180 vs lease-twice net cost $34,600. Buy wins by $11,420 over the 5-year window. The buy path is $190 per month cheaper in net effective cost ($11,420 spread over 60 months). The buy requires higher monthly cash flow during the active loan ($573 vs $505 = $68 per month more), but produces $11,420 of equity by month 60.

Cash flow trade-off framing. The buyer pays $4,080 more in cash flow over 60 months ($68 x 60) to receive $15,700 in vehicle equity at month 60. The implied return on the extra cash flow: roughly 285 percent return on the $4,080 investment over 5 years, or approximately 31 percent annualized return. Almost no other consumer-finance decision delivers this return profile. The buy-path advantage is structural and large.

The refi enhancer

The 60-month buy path becomes even more attractive when the buyer can refinance the loan after 12 to 18 months of on-time payments. Auto-loan refinancing is straightforward through online lenders (LightStream, Capital One Auto Refi, RateGenius), credit unions (Navy Federal, Pentagon Federal, Alliant), and some online banks. The typical refinance saves 0.50 to 1.50 percent on the APR for borrowers with improved credit scores, paid-down balance, or rate-market shift.

On the Outback example, refinancing at month 12 from 6.89 percent APR to 5.89 percent APR on the remaining $24,500 balance saves roughly $700 over the remaining 48 months of the loan. The refinance process is usually frictionless (no down payment, low or no fees, electronic signing, captive payoff handled by the new lender). The savings compound the buy-path advantage to roughly $12,100 over 5 years on the Outback.

The warranty consideration

The Subaru bumper-to-bumper warranty runs 36 months / 36,000 miles, powertrain 60 months / 60,000 miles. The 60-month buy exposes the buyer to out-of-warranty bumper-to-bumper repairs in months 37 to 60. The two-consecutive-30-month-leases path keeps the lessee within the bumper-to-bumper warranty for all 60 months (each lease cycle is fully covered, and the second cycle starts on a new vehicle with a fresh warranty).

The realistic out-of-warranty repair cost on an Outback in months 37 to 60 is, per Repair Pal and Consumer Reports reliability data, typically $400 to $1,800 across the 24-month out-of-warranty window. This is meaningfully less than the $11,420 buy-path advantage. Even if the buyer purchases a Subaru Added Security extended warranty at signing for $1,800 to cover years 4 to 7, the buy path still wins by approximately $9,600 over 5 years.

5-YEAR HORIZON: 60-MONTH BUY WINS DECISIVELY

Over a fixed 5-year window, a 60-month finance saves the buyer $9,000 to $18,000 on net cost versus two consecutive 30-month leases on a mainstream vehicle. The trade-off is $50 to $100 per month higher cash flow during the active loan, in exchange for $14,000 to $18,000 in vehicle equity at month 60.

The buy path is even more attractive for buyers expecting credit improvement (refi savings of $700 to $1,800), and is still preferable after accounting for out-of-warranty repair exposure in years 4 to 5.

5-year window FAQ

Is a 60-month loan cheaper than two 30-month leases? ⌄
Yes, on net cost over 5 years, by $9,000 to $18,000 on a mainstream $35,000 vehicle. The buy path total spend over 60 months is roughly $38,000 to $42,000 cash out, but the buyer holds a $14,000 to $18,000 asset at month 60, giving a net cost of $20,000 to $28,000. Two consecutive 30-month leases at $480 per month cost roughly $33,600 in payments plus $2,500 in fees with $0 asset, giving a net cost of $36,100. The buy path saves $8,000 to $16,000 on net cost. The trade-off is monthly cash flow: the loan payment is roughly $580 to $620 per month versus the lease payment of $480 per month, so the lease preserves $100 to $140 per month of liquidity during the active term.
Why does the buy path build more equity than two consecutive leases? ⌄
On a loan, every monthly payment includes a principal portion that reduces the loan balance and a interest portion that flows to the lender. Over 60 months at prime APR, the buyer pays down roughly $30,000 of principal on a $30,000 loan plus $5,500 in interest. The asset value at month 60 (vehicle worth roughly $16,000 with normal mileage) is the buyer's equity. On a lease, every monthly payment includes a depreciation portion that flows to the lessor and a rent charge portion that flows to the lessor; nothing accrues to the lessee. At the end of two consecutive 30-month leases, the lessee has paid for roughly $25,000 of depreciation and walked away with no asset. The buyer's $16,000 equity at month 60 is the gap.
Can I refinance a 60-month auto loan? ⌄
Yes, and it's a meaningful lever for buyers with improving credit. Online auto-refinance lenders (LightStream, Capital One Auto Refi, RateGenius, Autopay) plus federal credit unions and some online banks will refinance an existing auto loan typically anytime after the first 6 to 12 months of payment history. The savings depend on the rate spread: a 60-month loan originated at 9.0 percent APR (near-prime tier) refinanced at month 12 to 6.5 percent APR (prime tier with improved score) saves roughly $1,800 over the remaining 48 months on a $25,000 balance. The cost of refinancing is usually low (sometimes a small admin fee, sometimes $0), making it one of the highest-ROI consumer-finance moves for credit-improving borrowers.
What is the warranty implication of a 60-month buy? ⌄
Most mainstream-brand bumper-to-bumper warranties run 36 months / 36,000 miles, and powertrain warranties run 60 months / 60,000 miles. A 60-month buy exposes the buyer to out-of-warranty repair costs in years 4 and 5 for most non-powertrain items (electronics, infotainment, climate control, suspension). Two consecutive 30-month leases keep the lessee within the bumper-to-bumper warranty for the entire window. The practical risk on the buy path: most modern vehicles have low repair frequencies in years 4 and 5; the buyer's expected out-of-warranty repair cost over years 4 and 5 is typically $300 to $1,200 on mainstream brands, $600 to $2,500 on premium brands. This narrows the buy-path advantage but rarely eliminates it.
Does the OBBBA loan-interest deduction apply to refinanced loans? ⌄
Yes, on the original loan and on subsequent refinancings of the same vehicle, subject to the original-loan-origination-date rule. The OBBBA deduction applies to loans originated 1 January 2025 through 31 December 2028 for US-assembled new vehicles. If the original loan was originated on a qualifying date and the vehicle qualifies, refinancing to a lower rate does not affect deduction eligibility. The deductible interest amount changes (lower rate = lower interest = lower deduction) but the structural eligibility is preserved. Talk to a CPA about the documentation requirements for refinanced auto-loan interest claims.
Should I do a 60-month or 72-month loan? ⌄
60 months is usually the right call for most buyers. The 72-month loan reduces the monthly payment by roughly $80 to $130 on a typical $30,000 loan but adds roughly 12 months of interest ($1,500 to $2,500 in total additional interest cost) and keeps the buyer in negative equity longer (typically until month 40 to 48 versus month 30 to 36 on the 60-month). The Consumer Financial Protection Bureau has explicitly warned about the rise of 72 and 84-month auto loans as a consumer-protection concern because of the negative-equity persistence. 84-month loans are rarely the right choice; they exist primarily to hit a monthly-payment target on a vehicle that is too expensive for the buyer's budget.

Related pages

36-Month Lease vs Buy24-Month Lease vs Buy6-Year Total CostBuy MechanicsBy Horizon Decision AxisBreak-Even Calculator

Updated 2026-04-27