One car, three ways to pay for it

Lease, finance or cash, the whole model

Compared over the same 36 months, on the same car, with the resale value and the outstanding balance counted properly. Most comparisons stop at the monthly payment, which is the least useful number of the three.

Example car: Aveon Lume S
Horizon: 36 months
Finance assumption: 6.89% over 60 mo
Assumed resale: $22,275

The comparison that counts the end, not just the middle

Three ways to pay for one Aveon Lume

MSRP $41,250, selling price $40,100. The lease is 36 months at 10,000 miles. The finance column assumes 6.89 percent over 60 months with $4,000 down. All three are held for 36 months and then valued.

Lease, finance and cash compared over 36 months
Over 36 months	Lease	Finance, 60 mo	Cash
Cash out of pocket on day one	$2,672	$4,000	$42,936
Monthly payment	$342	$762 over 60 months	None
Paid across 36 months	$14,642	$31,432	$42,936
Still owed at month 36	Nothing	$17,066	Nothing
What you hold at month 36	Nothing, keys go back	A car worth about $22,275	A car worth about $22,275
End of term charge	$395 disposition, waived if you lease again	None	None
Net cost of 36 months	$15,037	$26,223	$20,661
Clean vehicle credit	$7,500 passed through, no income or assembly test	Only if the vehicle and your income both qualify	Only if the vehicle and your income both qualify
Who carries the residual risk	The lessor	You	You
Mileage limit	10,000 a year, $0.25 over	None	None
Condition standard at the end	Published wear standards apply	Only affects resale value	Only affects resale value

Scroll the table sideways to see every column.

All figures are samples for demonstration and exclude insurance, electricity, tyres and registration renewals, which are broadly similar across all three columns. Net cost of 36 months is everything paid, plus anything still owed, minus what the car is worth at that point. Resale value is assumed at 54 percent of MSRP, which is a conservative private party estimate for a three year old electric sedan. Your own figures will differ.

What the model actually says

Nobody wins every column

Lease wins when

You want a new car every three years anyway
Your mileage is predictable and inside a band
You want the $7,500 credit without an income or assembly test
You would rather the lessor carried the residual risk on a fast moving technology
Day one cash matters more than long run cost

Finance wins when

You keep cars for six years or more
You drive well over 15,000 miles a year
You modify vehicles, tow heavily or work them hard
You can get a subvented rate well under the money factor equivalent
You are comfortable owning the residual risk yourself

Cash wins when

You have money earning less than the finance rate
You want no monthly line item at all
You plan to keep the car past eight years
You accept that the whole depreciation is yours
You are not relying on the clean vehicle credit

An electric vehicle connected to a charger

The argument specific to electric cars

Residual risk is higher on an EV, and that cuts both ways

Charging speeds, pack chemistry and incentive programmes have all moved faster than anybody's three year forecast for most of the last decade. That uncertainty is exactly what the residual percentage is pricing.

On a lease, the lessor carries that risk. If used electric values fall further than the forecast, that is their problem, and you hand the keys back at the number you agreed. If values hold up better than expected, the difference is equity you can take by buying at the residual. Owning the car means you carry the risk in both directions.

It is also why leasing is the only route where the $7,500 credit applies without an income cap or an assembly location test. The lessor claims it as the owner and passes it through. We pass through all of it, shown as its own line on the worksheet.

How the credit works Run your own numbers

Where your payment actually goes

Residual value, and the depreciation you rent

A lease charges you for the value a car loses while you have it, not for the car. The residual is the lessor's forecast of what it will be worth at the end, set as a percentage of MSRP. Every card below shows that forecast at four terms, and the split between the part you pay for and the part the lessor keeps.

Read how residuals are set